Outside Voices: Small Business

Don't Forget About Nonemployer Small Businesses

November 19, 2008 RSS Feed Print

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Dawn Rivers Baker

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.

Dawn Rivers Baker is the award-winning journalist behind The MicroEnterprise Journal, the online business news weekly that covers politics and policy, the economy, and research for and about microbusinesses. Baker also blogs at The Journal Blog.

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Kudos Ms. Baker. I am an independent businessman. What started as a small contracting business has evolved and changed beyond recognition. I still have a "tool bag." Only now is is knowledge, experience, education, relationships and some working capital. All else has changed and will continue to change.
Most other entreprenureal types will end up in different but somehow related businesses than they started. Working within the The tax, banking and regulatory systems has been and is a constant challenge. And never more when it changes so convulsively.
Thanks Ms. Baker and the NFIB. Keep up the good work.

John Quinn of WA 4:35PM November 26, 2008

We own our own business in the State of Washington as well as Bruce Baker in the previous comment. We too have found that as a small employer-we actually have 4 family memebers and 2 to 3 other employees-that we are left out when it comes to any consideration by the government. But, you do not see us trying to get a bailout, we just figure out how to keep going and tighten our belts and make do. really a pity that we have come to this with all those "big, publicly traded, inter-country" companies. Yes, Washington State is not a business friendly state anymore-high taxes and regulations are killing us all. Maybe it is time for the government/s to realize just what we do add to this great country and cut us some slack.

Joye of WA 8:41PM November 20, 2008

I would qualify myself as a nonemployer. And indeed when it comes to pooling all small business I suffer from identity crisis. The small business pie is large; small businesses are said to be the source of the majority of employees. Yet, for those of us who sustain ourselves through small business, prefer not to be an employee of anyone, and pay our own way every step of the way do not always get a slice of the overall business pie. I like the term nonemployer and think it could be a catagory in and of itself. Perhaps if our numbers warrant it, we may be able to vie for legislation that supports and encourages us in business.That means we have to identify ourselves rather than waiting for someone else to finally recognize us.

Michele of CT 6:08PM November 20, 2008