Purpose and Use of Nonemployer Statistics

Nonemployer Statistics provide U.S. and subnational economic data by industry for businesses that have no paid employees and are subject to federal income tax. This series is useful for studying the economic activity of small businesses at various geographic levels. Businesses use the data for analyzing market potential, measuring the effectiveness of sales and advertising programs, and developing budgets. Government agencies use the data for administration and planning.

Most types of businesses covered by the Census Bureau economic statistics programs are included in the Nonemployer Statistics. All of the Agriculture, Forestry, Fishing, and Hunting sector, except crop and animal production, are covered in Nonemployer Statistics. These industries typically are not covered in other Census Bureau economic programs. Most nonemployers are self-employed individuals operating very small unincorporated businesses, which may or may not be the owner’s principal source of income. Although nonemployers constitute a large part of the business universe in terms of the number of firms, they contribute a relatively small portion of the overall sales and receipts data. Tax-exempt businesses are excluded from the nonemployers tabulations.

Nonemployer Statistics have been released every 5 years since 1972, for years ending in "2" and "7" for selected industries in conjunction with Economic Census publications. Comparability of data over time may be affected by definitional changes for firms, activity status, industrial classifications, and processing methodology. For more details on these changes, see the section "Comparability With Other Data,” below. The 2002 Nonemployer Statistics is part of the 2002 Economic Census Core Business Statistics Series. Nonemployer Statistics was first released as an annual series beginning with the 1998 report.

SOURCES OF DATA

Nonemployer Statistics data originate from administrative records of the Internal Revenue Service (IRS). Data are primarily comprised of sole proprietorship businesses filing IRS Form 1040, Schedule C, although some of the data is derived from filers of partnership and corporation tax returns that report no paid employees. These data undergo complex processing, editing, and analytical review at the Census Bureau to distinguish nonemployers from employers, correct and complete data items, and form the final nonemployer universe.

INDUSTRY, GEOGRAPHY, AND LEGAL FORM OF ORGANIZATION CLASSIFICATIONS

Industry Classifications

The Nonemployer Statistics is published based on the North American Industry Classification System (NAICS). The 1997 NAICS codes are the basis of industry classification for the nonemployer data tabulated for reference years 1997 through 2001. Starting with 2002, Nonemployer Statistics are classified and tabulated based on the 2002 NAICS codes, which contain several significant revisions from the 1997 codes. Detailed information about NAICS, including changes for 2002, and comparability with 1997 codes, is available at http://www.census.gov/epcd/www/naics.html

The Nonemployer Statistics series includes the following NAICS sectors:

The following NAICS industries are excluded from Nonemployer Statistics:

• Crop Production (NAICS subsector 111)
• Animal Production (NAICS subsector 112)
• Investment Funds, Trusts, and Other Financial Vehicles (NAICS subsector 525)
• Management of Companies and Enterprises (NAICS sector 55)

Sources for assigning Nonemployer Statistics industry classifications are the Social Security Administration, the Internal Revenue Service (IRS), and the Bureau of Labor Statistics. Industry classifications derived from the IRS are self-classified by tax filers.

The industry titles used in this series are the short NAICS titles. Information on NAICS and recent changes are at http://www.census.gov/epcd/www/naics.html. Nonemployer Statistics are limited to approximately 300 industries that are available through administrative-record sources, and are common to all three legal forms of organization applicable to nonemployer businesses. Because of this, data for nonemployers generally are provided at broader levels of industry detail than data for employers.

For those nonemployer businesses that were unclassified, NAICS classifications were imputed by assigning the code of a nonemployer business with comparable receipts located in the same county. For more information, refer to Coverage and Methodology.

Geography Classification

The Nonemployer Statistics data series provides summary tabulations for the United States, each state, the District of Columbia, each county (and county equivalent), and metropolitan areas.

Most geography codes are derived from the business owner`s mailing address identified from administrative records. Because the owner’s mailing address may not be the same as the physical location of the business, the resulting geography codes do not always represent where business is actually conducted.

The nonemployer tabulations exclude records with invalid, foreign, or military geographic locations. The independent cities in Virginia and the cities of Baltimore, MD, Carson City, NV, and St. Louis, MO, are treated as separate counties. Puerto Rico and Outlying Areas are not included in the nonemployer tabulations.

Legal Form of Organization Classification

The legal form of organization for nonemployer businesses is derived from administrative record sources. Nonemployer Statistics presents U.S.-level data by the following three legal forms of organization:

• Individual proprietorships (also referred to as “sole proprietorships”)
• Partnerships
• Corporations

DEFINITIONS OF BASIC DATA ITEMS

Firms

Generally, a firm is a single physical location where business is conducted or services or industrial operations are performed. However, for nonemployers we count each distinct business income tax return filed by a nonemployer business as a firm. A nonemployer business may operate from its owner’s home address or from a separate business location. Most geography codes are derived from the business owner`s mailing address, which may not be the same as the physical location of the business.

Receipts

Includes gross receipts, sales, commissions, and income received from trades and businesses, as reported on annual business income tax returns. Business income consists of all payments received for services rendered by nonemployer businesses, such as payments received as independent agents and contractors.

The composition of nonemployer receipts may differ from receipts data published for employer establishments. For example, for wholesale agents and brokers without payroll (nonemployers), the receipts item contains commissions received or earnings. In contrast, for wholesale agents and brokers with payroll (employers), the sales and receipts item published in the 2002 Economic Census represents the value of the goods involved in the transactions.

COMPARABILITY WITH OTHER DATA

The comparability of data with previous Nonemployer Statistics series may be effected by the following:

• Change in NAICS industries within Sectors 23, 42, 44-45, and 51, starting with 2002.
  
  
• The change from SIC to NAICS codes in 1997.
  
  
• The change to imputing industry classifications (see “Industry Classifications” section, above) for unclassified nonemployer businesses. Prior to 1997, unclassified businesses were excluded from the nonemployer tabulations.
  
  
• The inclusion of all industry sectors, except as noted in the “Industry Classifications” section, above. Prior to 1997, previous nonemployer tabulations covered businesses in the Services, Retail, Finance, Insurance, Real Estate, Transportation, Communications, Utilities, and Construction sectors.
  
  
• The change to providing county- and metropolitan area-level data for all industry sectors in 1997.

RELIABILITY OF THE DATA

The Nonemployer data are subject to nonsampling errors such as industry misclassification, as well as errors of response, nonreporting and coverage. The IRS Tax Reporting Relief program allowed taxpayers in hurricane affected regions additional time in filing tax returns. The 2004 and 2005 Nonemployer totals may be low due to late tax reporting in hurricane impacted counties/regions.

DATA WITHHELD FROM PUBLICATION

In accordance with U.S. Code, Title 13, Section 9, no data are published that would disclose the operations of an individual business. Because the preponderance of Nonemployer Statistics data items originate with the IRS, we adhere to both Census Bureau and IRS disclosure guidelines. For tables at all levels of geography (U.S., state, county, metropolitan area) we publish the number of firms and receipts in a data cell only if it contains three or more nonemployer businesses. In tables based on data from reference year 2004 or earlier, cell suppression was used to protect data confidentiality for those cells that had a value based largely on contributions from one or two firms. Beginning with reference year 2005, values for each firm are perturbed prior to table creation by generating a random noise multiplier that is chosen independently for each company. This perturbation is used to protect firm and company values from disclosure. This protection is accomplished in a manner that causes the vast majority of cell values to be perturbed by at most a few percentage points. When the number of firms for a cell is only one or two, the cell value is suppressed, and these suppressions are assigned a flag of “D”.

If more than 40 percent of either receipts or firms in a published data cell are from firms with an imputed industry classification, we suppress both items because the data do not meet publication standards. These suppressions, as well as any other data cells not meeting publication standards, are assigned a flag of "S." The "S" flag indicates there are firms engaged in economic activity for that industry level and the suppressed data are included in higher-level totals.

For an introduction to the noise confidentiality protection method, see Using Noise for Disclosure Limitation of Establishment Tabular Data by Timothy Evans, Laura Zayatz, John Slanta in the Journal of Official Statistics (1998). For specific information about the application of this method to Nonemployer Statistics, contact the Economic Planning and Coordination Division, Register Analysis Branch listed below.

DATA PRODUCTS

Data Formats

Nonemployer Statistics series data are available in CD-ROM, DVD-ROM, and hypertext table (html) formats for U.S., state, county, and metropolitan area levels and in portable document format (pdf) at the U.S. and state level only. No printed publications of Nonemployer Statistics are available. However, our Customer Service Branch will print and bind the pdf version for a fee. See contact information below.

Only the NAICS classifications common to all three legal form of organization classifications assigned to nonemployer businesses are shown in the tabulations. Only those NAICS classifications with economic activity are displayed.

The Nonemployer Statistics CD-ROM contains menu-driven access software. The CD-ROM also includes software for creating nonemployer data files compatible with popular database and spreadsheet software. The CD-ROM is a powerful software tool to search and manipulate nonemployer data.

The Nonemployer Statistics data products on html and pdf can be accessed at http://www.census.gov/epcd/nonemployer/index.html. In order to view the pdf files, you will need the Adobe Acrobat Reader, which is available for free from the Adobe Web site at http://www.adobe.com/. Two tabulations are presented in pdf. The U.S.-level tabulation presents the number of firms and receipts by NAICS industry and by legal form of organization. The state-level tabulation presents number of firms and receipts by NAICS industry for each state and the District of Columbia.

To order Nonemployer Statistics data products, contact:

   Customer Services Branch
   Marketing Services Office
   U.S. Census Bureau
   Washington, DC 20233

   Telephone: 301-763-INFO (4636)
   Internet Link (Under CENSUS PRODUCTS, Click BUSINESS)

For more information on Nonemployer Statistics, including special tabulations, contact:

   U.S. Census Bureau
   Economic Planning and Coordination Division
   Register Analysis Branch
   Washington, DC 20233

   Telephone: 301-763-2580
   Fax: 301-763-6633
   E-mail: epcd.nonemployer.statistics@census.gov

ABBREVIATIONS AND SYMBOLS

The following abbreviations and symbols are used in this data series:

(D) - Withheld to avoid disclosing data for individual businesses; data are included in broader industry totals.
(S) - Withheld to avoid releasing data that do not meet publication standards; data are included in broader industry totals.
NAICS - North American Industry Classification System
PMSA - Primary Metropolitan Statistical Area
CMSA - Consolidated Metropolitan Statistical Area
MSA - Metropolitan Statistical Area

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Source: U.S. Census Bureau, EPCD, Nonemployer Statistics.

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Page Last Modified: August 21, 2008