The term “Employed Business” has come into question after a new Census Bureau report revealed that nearly three-fourths of firms in the United States did not have any employees. Those are businesses that were not classified according to owner demographics in 2007. The numbers may surprise you, but the report does highlight the fact that there are a variety of different types of businesses in the United States. Here is a look at the types of workers in each type of business, and how they are classified for tax purposes.
Traditionally, businesses are brick-and-mortar operations with paid employees. In 2016, the CPS reported that there were more than 27.6 million business establishments in the United States. While they employ the majority of the labor force, many businesses offer benefits to their employees. Regardless of whether you are an employer or employee, the SBA’s County Business Patterns program shows that businesses pay about $6.4 trillion in payroll each year.
The employment relationship is very similar, with both parties contributing to the growth of the economy. However, an employee is not a partner in a business, and the employer pays them a regular salary and gives them time off for sickness. While an employee is not an owner, they are paid a regular salary and benefits and can move from one task to another. In addition, the employer may provide benefits to their spouse, and the average revenue of a non-employer business can be high enough to offset the lack of benefits.