HomeBusiness Insurance27M Americans own businesses with no employees—here's who they are

27M Americans own businesses with no employees—here’s who they are

Tens of millions of American business owners have only one person on their payroll: themselves.

They’re the lone wolves of the U.S. workforce, yet they comprise about 80% of U.S. small businesses. And they’ve been growing in numbers for at least a decade, reaching 27 million in 2022.

Formally referred to as “nonemployer” businesses, these types of companies are typically started by an individual, or sole proprietor, looking to get paid for work they perform independently.

In real terms, they’re consultants, contractors, social media influencers, direct sellers on Shopify or Etsy, and young startups—and they’re all more likely to tap credit cards for funding rather than seek out big venture capital deals or even seek a loan from family and friends.

They’re an increasingly significant part of building a more resilient U.S. economy, according to recent studies on the economic impact of microbusinesses, or those with fewer than five employees.

A Small Business Credit Survey conducted from September to November 2022 found that close to half (46%) of nonemployer startups planned to make hires within a year, diversifying employment opportunities within their communities.

Next Insurance, a provider of sole proprietor business insurance, used the latest available Census Bureau data to analyze the demographics of owners of nonemployer firms, looking at age, race and ethnicity, immigration status, and sex, which was limited to binary-based classifications.

Since the data is based on IRS business income tax records, it’s the most comprehensive and accurate way to analyze the demographics of nonemployer businesses. Data was released in August 2023 but covers 2019 due to delays in tax filing and processing as a result of the COVID-19 pandemic.

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