Home-based Sole Proprietors Generate $102 Billion in Annual Revenue

June 1, 2006; 03:16 AM

WASHINGTON - America's home-based sole proprietors generate $102 billion in annual revenue, according to a study released today by the Office of Advocacy of the U.S. Small Business Administration. The study details revenues, expenses, and income for both home-based and non-home-based sole proprietors by industrial sector.

"Sole proprietorships are a vital part of our economy," said Thomas M. Sullivan, Chief Counsel for Advocacy. "Many are home-based micro businesses; collectively they generate a significant amount of economic activity. For the average sole proprietor, their business provides benefits of entrepreneurship that go beyond just income and revenue."

Written by Joanne H. Pratt with funding from the Office of Advocacy, The Impact of Location on Net Income: A Comparison of Home-based and Non-Home-based Sole Proprietors examines federal income tax data from year 2002 sole proprietorship returns (Schedule C).

The report presents a comparison of home-based and non-home-based sole proprietorships. For example, it finds that the average home-based sole proprietor earned $22,569 in net income while their non-home-based counterparts earned $38,243. Due to lower expenses, particularly in rent and labor costs, the average home-based sole proprietor consistently gained a higher return on gross revenues at 36 percent, versus 21 percent for the non-home-based.

The report also finds that the percent of home-based sole proprietorships was greatest in the Administrative, Support, and Waste Management; Information; and Construction sectors. For the non-home-based, the percentage was greatest in the Accommodation and Food Services; All Other Services; and Finance and Insurance sectors.

The Office of Advocacy, the "small business watchdog" of the government, examines the role and status of small business in the economy and independently represents the views of small business to federal agencies, Congress, and the President. It is the source for small business statistics presented in user-friendly formats and it funds research into small business issues.

For more information and a complete copy of the report, visit the Office of Advocacy website at http://www.sba.gov/advo.

The Office of Advocacy of the U.S. Small Business Administration (SBA) is an independent voice for small business within the federal government. The presidentially appointed Chief Counsel for Advocacy advances the views, concerns, and interests of small business before Congress, the White House, federal agencies, federal courts, and state policy makers. For more information, visit http://www.sba.gov/advo or call 202-205-6533.