Background: When it comes to reporting their business income for tax reasons, most people who are independent workers or own a one-person small business use the IRS designation “sole proprietors” and file a tax return form referred to as “Schedule C of Form 1040.”) In the following article, Steve King, a partner at Emergent Research and a regular SmallBusiness.com contributor, explains a trend he’s observing in data about sole proprietors: More and more sole proprietors are engaging the services of other sole proprietors.

A close look at data recently released by the IRS pertaining to sole proprietors reveals interesting information that continues to point to the growth of the number of individuals who are working as independent workers or sole proprietors.

First, look at the growth in sole proprietors between 2012 and 2013 (the most recent reported period), both in the number of sole proprietors there were and the revenues they generated.

2012

23.5 million | sole proprietors
$1.30 trillion | gross receipts

2013

24 million | sole proprietors
$1.34 trillion | in gross receipts

Chart | Usage by Sole Proprietors of Contract Labor

Key Statistics

38% | Growth in the dollar amount of sole proprietor’s use contract labor between 2010 and 2013
10.7% | (Comparison) Increase in salary and wage expense during the same period

Expectations

The use of contract and contingent labor by businesses large and small continues to grow. Emergent Research expects this trend to continue.

(Photo: WOCinTech Chat via Flickr, CC BY 2.0)