Chart of the Week: Most S-Corps are Micro Businesses

Most people think that Subchapter S Corporations tend to be larger small businesses. However data from a study of small business tax compliance led by Donald DeLuca of IBM Global Services show that the vast majority of Subchapter S Corporations are micro-businesses – companies with fewer than 10 employees.

As the figure below indicates, 77 percent of S corporations have five or fewer empoyees and 87 percent have fewer than 10. In fact, counter to the common notion that virtually all self-employed people without employees operate their businesses as sole proprietorships, the data show that 44 percent of Subchapter S corporations have zero employees.

Source: Created from data from “Estimates of U.S. Federal Income Tax Compliance for Small Businesses,”
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Scott Shane Scott Shane is A. Malachi Mixon III, Professor of Entrepreneurial Studies at Case Western Reserve University. He is the author of nine books, including Fool's Gold: The Truth Behind Angel Investing in America ; Illusions of Entrepreneurship: and The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By.

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