Businesses With No Paid Employees Increase to 19.5 Million

     The image of a typical “mom and pop” business is getting a makeover, according to new data on these burgeoning enterprises released today by the U.S. Census Bureau. Yesterday’s notion of a family-run corner store is giving way to Internet-based auctions, nail salons and even motorcycle dealerships, according to Nonemployer Statistics: 2004 [PDF].

     The nation added nearly a million businesses with no paid employees between 2003 and 2004 to reach 19.5 million, a growth rate of 4.7 percent over a one-year period. Businesses without a payroll make up more than 70 percent of the nation’s 27 million-plus firms, with annual receipts over $887 billion.

     The report has data on 17 million individual proprietorships and on more than 1.3 million corporations and 1.2 million partnerships. Nonemployer firms may be run by one or more individuals, can range from home-based businesses to corner stores or construction contractors and are often part-time ventures with owners operating more than one business.

     Among the fastest-growing: building finishing contractors (22.5 percent), Internet service providers (18.7 percent), nail salons (14.7 percent), electronic shopping and mail-order houses -- including Internet-based consumer trade (12.7 percent), lessors of real estate (9.7 percent), formal wear and costume rental stores (8 percent) and motorcycle dealers (7.4 percent).

     Florida led the nation in the growth of these small businesses with a 7.6 percent increase between 2003 and 2004. Georgia climbed to second place with a 7.1 percent increase, while Nevada fell from first to third place with a 6.4 percent increase.

     The Census Bureau cautioned that the numbers released today may be understated because the hurricane-impacted areas of Alabama, Florida, Louisiana, Mississippi and Texas were granted additional time by the Internal Revenue Service (IRS) to file 2004 tax returns.

     Other highlights:

• Utah and Arizona had small business increases of 6.1 percent and 5.8 percent, respectively, to round out the top five states. Despite a slight drop in its rate of self-employed business people, Nevada led the nation in receipts with a gain of 12.9 percent (See Excel Table 1.)
• Among the nation’s most populous counties, Los Angeles County, Calif., had 777,103 nonemployer businesses, with Cook County, Ill., second at 363,365. They were followed by Miami-Dade County, Fla., at 273,016.
• In Miami-Dade, Fla., real estate businesses accounted for more than 21 percent of the $10.2 billion total receipts.
• Other counties with increases in nonemployer business growth included Orange County, Fla. (11.2 percent); Clark County, Nev. (7.9 percent); San Bernardino County, Calif. (7.1 percent); Maricopa County, Ariz. (6.7 percent); Montgomery County, Md., (4.9 percent); and Fairfax County, Va. (4.7 percent). (See Excel Table 2.)

     The detailed Internet tables show the number of establishments in nearly 300 industries and their receipts for the nation, states, counties and metropolitan areas. The data do not cover all self-employed individuals, since many self-employed business owners have paid employees.

Nonemployer statistics data originate chiefly from administrative records of the IRS. The data are subject to nonsampling error such as errors of self-classification as well as errors of response, nonreporting and coverage. Further information about methodology and data limitations is available at <http://www.census.gov/epcd/nonemployer/view/covmeth.htm>

Detailed tables