Sole Proprietorship Facts & Statistics (2022 Data)

What percentage of United States businesses are Sole Proprietorships?

According to the 2020 US Census from 2020, there were 826,915 Sole Proprietorship type business establishments in the United States. Compare this to the total 8,000,178 Business establishments in the US.

Based on this, 10.34% of US Businesses are Sole Proprietorships.

Source: Census Table-CB2000CBP Dataset-CBP2020 Data Released-May 26, 2022

What are the Largest Sole Proprietorships in the world?

Believe it or not, the Largest Sole Proprietorship in the world simply wouldn’t exist.

Unfortunately, Sole Proprietors don’t receive any Limited Personal Liability Protections. This single factor means anybody with a significantly sized Sole Proprietorship would surely upgrade their Business type to a Single-Member LLC or Corporate variation as soon as humanly possible.

Without any liability protections, any massively successful sole proprietor would be out of their mind to NOT convert their business to one which provides the peace of mind of Limited Personal Liability Protections, the savings of tax breaks, and the option to expand and add Owners and Investors.

Sole Proprietorship Tax Return Statistics from 2019, 2018, 2017, 2016, and 2015

Nonfarm Sole Proprietorship Statistics

Year Profitable Businesses Only All Businesses
Number of Tax Returns Net Income Number of Tax Returns Net Income Less Deficit
2019 20,068,698 $443,311,370,000 27,817,189 $355,177,264,000
2018 19,634,588 $429,990,931,000 27,117,163 $348,509,654,000
2017 19,434,121 $415,788,805,000 26,426,406 $346,241,776,000
2016 18,959,230 $389,138,987,000 25,525,915 $328,209,453,000
2015 18,784,750 $392,114,132,000 25,226,245 $331,832,538,000

Sources: IRS, Statistics of Income Division, Sole Proprietorship Returns 2019, November 2021. IRS, Statistics of Income Division, Sole Proprietorship Returns 2018, September 2020. IRS, Statistics of Income Division, Sole Proprietorship Returns 2017, September 2019. IRS, Statistics of Income Division, Sole Proprietorship Returns 2016, August 2018. IRS, Statistics of Income Division, Sole Proprietorship Returns 2015, July 2017.

The 5 Strengths and Advantages of a Sole Proprietorship

  1. There’s no paperwork or State registration hoops to jump through
  2. Simplest and fastest business entity to set up
  3. You have total control over every facet of the business
  4. Dissolving the business is effortless
  5. The easiest taxation model: The Pass-Though Process

As the simplest business entity to both set up and operate, it is no wonder why so many people opt for Sole Proprietorships as opposed to going through the headache of registering a business with your state. Other, more complicated businesses (LLCs and Corporations)require a lot of upkeep and annual registration fees.

Honestly, the best part of a Sole Proprietorship is getting out of having to file stacks of paperwork and deal with government bureaucracy.

➤ MORE: Have a deeper look at the Sole Proprietorship's greatest attributes.

What is a major weakness of the Sole Proprietorship?

The main pitfall of starting a Sole Proprietorship is the limitations on what you can and cannot do.

For instance, it can be extremely difficult to secure funding as an unregistered, unrecognized business. To put it in modern tongue… you don’t have any clout while operating as a Sole Proprietor.

It’s also important to consider the amount of liability you take on as a Sole Proprietor. Any debts or liability falls directly on you. Like it out not, you are “solely” responsible for every aspect of your business. Banks can’t give you a business loan or business credit cards because, legally speaking, you don’t have a business. You are just making money under your name by providing goods and services. There is no entity and no liability protection.

➤ MORE: What else is wrong with being a Sole Proprietor?