9 Home-Based Business Statistics You Need to Know

1. Fifty percent of U.S. businesses are home-based businesses. 
2. There are roughly 15 million home-based businesses in the U.S.
3. About 60% of home-based businesses are “nonemployer” businesses.
4. Sixty-nine percent of startups are home-based businesses.
5. The information and construction industries are far more likely to be home-based businesses than other industries.
6. Women are more likely to have home-based businesses than men.
7. In the 2014 tax year, $9.5 billion was claimed in home office expenses. 
8. Census data from the Survey of Business Owners showed that 57.1% of home-based businesses brought in less than $25,000 in revenue.
9. It takes 44% of home-based business owners $5,000 or less to start their businesses.

If you could eliminate your commute completely and be able to work from the comforts of your own home instead, would you? Millions of Americans run part-time or full-time businesses from their homes each year and account for a significant portion of small businesses across the United States.

Their commutes are mostly non-existent unless they travel to see clients, many of them don’t have employees, and they get to be their own bosses, sounds pretty great right?

If any of that sounds appealing, or you’ve been considering starting a business out of your home, you should know these home-based business statistics. But first, let’s define what a home-based business is.

Though it might sound like it, a home-based business is not the same thing as simply working from home. Home-based businesses are actually businesses where the main office is located in the home of the business owner—in other words, company headquarters doubles as home. 

This is different than working from home, which can be a temporary or part-time situation and usually, those who work from home have offices or work for companies with offices headquartered elsewhere. Keep this in mind while reading the home-based business statistics to follow.

When it comes to home-based businesses, there’s a lot to know—whether you’re considering starting your own or just want to learn more about the industry. One of the most important things you can remember, though, is that if you do start a home-based business, you’ll be in good company.

Roughly 50% of all small businesses in the United States are considered home-based. [1] That number increases to 60.1% when looking specifically at nonemployer firms, or companies that don’t have any employees. So if you’re running a small business from your home, and you’re the only employee, you’re one of many people doing something similar in the U.S. This number has stayed relatively constant over the last 10 years.

There are 30.2 million small businesses in the U.S., according to the Small Business Administration. [2] So if about half of them are home-based, that means there are roughly 15 million home-based small businesses across the country.

Remember, these home-based businesses can be anything. From online boutiques to accounting firms run from a home office. As we mentioned above, the only requirement is that the business is run out of the home and the home serves as the main office or headquarters for the business.

A nonemployer business is defined as a business with no paid employees and annual business receipts of $1,000 or more. [4] This definition varies a bit for the construction industries, where they only need $1 or more in receipts and no employees to be considered a nonemployer. Those receipts are the gross receipts, sales, commissions, and any income from trades and businesses that are reported on income taxes. [5]

So anyone you know who runs their own business from home as a one-woman or one-man operation is technically running a nonemployer business. Most of these nonemployer businesses are made up of people who are self-employed or people who are running one-person unincorporated businesses. 

In 2016, 76.2% of businesses in the U.S. were nonemployer establishments, though they only account for about 4% of sales and receipts. [6]

Some of the most successful businesses around were started in the home. Take Apple and Disney for example, both were started in the home of their founders and now they’re two of the largest organizations in the country, if not the world. Today, 69% of startups begin in the home as home-based businesses. [7] So who knows what next major company might be getting started as a home-based business today.

Home-based business statistics show there’s a 70% chance of information industries being home-based, and a 68.2% chance of construction businesses being home-based. The next most popular industries to have home-based businesses are professional, scientific, and technical services.

The percentage of home-based businesses run by women is far higher than those run by men. [7] Nearly three-quarters of the home-based businesses that exist are actually run by women. In 2011, 58.2% of women-owned businesses were home-based businesses. [8]

There is something called the “home office deduction” that home-based business owners are eligible for. [9] If you use your home regularly or exclusively for business, or if it is your principal place of business, as it would be if you had a home-based business, you can claim the home office deduction on your taxes. In the 2014 tax year, home-based business owners claimed $9.5 billion in home office expenses. [10] Home-based business owners can claim this deduction whether they own or rent their home. Other home office expenses that home-based business owners can claim are for insurance, utilities and more. If you’re unsure if you’re taking advantage of every business deduction you’re eligible for, this list of home-business tax deductions can help.

Census data released in 2011 from the 2007 Survey of Business Owners showed that 57.1% of home-based businesses brought in less than $25,000 in revenue, while only 6.9% of home-based businesses brought in more than $250,000. [11]

While home-based businesses might not be the most lucrative overall, it also takes far less money to start this type of endeavor than a business with a physical location might. Roughly 44% of home-based business owners only needed $5,000 or less to get started. [12]

While this figure is smaller than the hundreds of thousands in capital that some businesses require to get started, you may still find that you need more startup money than you’ve got in the bank. If this is the case, you can opt for small business financing to help you launch your home-based business. There are plenty of options available to you, such as SBA microloans, business credit cards, business lines of credit, and more. Keep in mind, though, some loans are designed to be used for specific business necessities.

To make your loan applications as appealing as possible, you’ll want to start with a solid credit score. Other requirements vary by loan. Luckily, just one application is all it takes to see what loan options you have available to you.

If you’re interested in starting your own home-based business it’s good to know what you’re getting into. The home-based business industry is one that can be somewhat hidden because it does take place in the homes of business owners and behind closed doors. And based on revenue numbers, home-based businesses are smaller in scale. While home-based businesses can grow into huge enterprises, the majority are more modest operations.

The number of home-based businesses in the U.S. has held relatively steady over the last decade or so even though the rate of professionals who work from home has increased. This is just another reason why it’s important to keep in mind that running a home-based business and working from home are actually two very different things. 

Nonetheless, these home-based business statistics show that millions of people run their business from home. If you have dreams of starting a business, these home-based business ideas can be a good place to start.

Resources:

1. https://www.sba.gov/sites/default/files/advocacy/Frequently-Asked-Questions-Small-Business-2018.pdf
2. https://www.sba.gov/sites/default/files/advocacy/2018-Small-Business-Profiles-US.pdf
3. https://www.sba.gov/sites/default/files/advocacy/SB-FAQ-2016_WEB.pdf
4. https://www.census.gov/epcd/nonemployer/view/define.html
5. https://www.census.gov/quickfacts/fact/note/US/NES010217https://www.census.gov/epcd/nonemployer/view/define.html
6. https://www.census.gov/library/stories/2018/09/three-fourths-nations-businesses-do-not-have-paid-employees.html
7. https://smallbiztrends.com/2013/07/home-based-businesses-startup.html
8. https://www.census.gov/newsroom/releases/archives/business_ownership/cb11-110.html
9. https://www.irs.gov/businesses/small-businesses-self-employed/home-office-deduction
10. http://eyeonhousing.org/2017/02/who-claims-the-home-office-deduction/
11. https://www.census.gov/newsroom/releases/archives/business_ownership/cb11-110.html
12. https://www.incfile.com/blog/post/shocking-us-home-based-business-statistics/

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