Don't Forget About Nonemployer Small Businesses

"Sole proprietor?" Try "nonemployer."


If you run a small business in the United States, the odds are 3 to 1 that it's a nonemployer business.

Sadly, the odds also favor something of an identity crisis for you.

The term "nonemployer" business was coined (as far as I know) by the Census Bureau, and almost nobody uses the term except me (also as far as I know). I use it for its precision.

Many people refer to a firm with no paid employees as "the self-employed," but that's inaccurate. If you are in business and you work in your business, you are self-employed—no matter how many employees you have.

Some folks call this set of firms "sole proprietors." Again, misleading.

"Sole proprietorship" is a legal business form. It doesn't matter how many employees you have; if you file a Schedule C with your taxes, you are a sole proprietor.

There are other terms. There is the unwieldy "one-person business" or the cozy "personal business." There are "solopreneurs" and independent contractors and freelancers, and there are "side businesses" and "hobbyists," too.

It's a big pie—more than 21 million strong—and there's a lot of ways to carve it.

And that's why I like "nonemployer."

Policymakers tend to ignore these nanobusinesses. "Nonemployer business" is a nice, all-encompassing term, and there is strength in numbers.


small business

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