Founder Data Report31 Million Businesses Filed a Schedule C. Nearly a Third Reported No Profit.
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The IRS counted 31.1 million nonfarm sole proprietorships in tax year 2023, turning $2.06 trillion of receipts into $12,119 of average net income. The average is the least useful number in the table.
Quick answer: In tax year 2023 the IRS counted 31.1 million nonfarm sole proprietorships. Between them they reported $2.06 trillion in business receipts and $377.2 billion in net income less deficit – an average of $66,285 in revenue and $12,119 in profit per return. 31.2% of them, 9.7 million businesses, reported no net income at all. Among the 68.8% that did make money, the average was $24,790.
- 31.1 million nonfarm sole proprietorships filed a Schedule C for tax year 2023 – far more businesses than the roughly 6 million US employer firms most benchmarks describe.
- Average business receipts: $66,285. Average net income less deficit: $12,119. Both are means over every filer, and the distribution behind them is nothing like a bell curve.
- 31.2% – 9.7 million returns – reported no net income. That is not a rounding error at the edge of the data; it is close to a third of the population.
- Among the 68.8% that did report a profit, average receipts were $78,995 and average net income $24,790.
- Revenue rank and income rank are not the same list. Retail trade averages $87,623 in receipts and keeps $3,610; Professional and technical services averages $63,957 and keeps $25,388 – less revenue, 7 times the profit.
- Sector matters more than effort for the odds of making anything at all: Construction filers report a profit 79.7% of the time, Retail trade 51.9%.
The population almost every benchmark leaves out
When you read that “the average small business” does some number in revenue, check which businesses were counted. Most benchmarks are built from employer firms – the roughly 6 million US businesses that run a payroll. The IRS counts a different and much larger population: 31,125,909 nonfarm sole proprietorships filed a Schedule C for tax year 2023.
Between them they reported $2.06 trillion of business receipts. That is a serious share of American commercial activity, and it is invisible in any dataset that starts at the first employee.
Divide it through and the arithmetic is sobering. Average receipts per return: $66,285. Average net income less deficit: $12,119 – a margin of 18.3%. Those are the numbers the phrase “the average small business” is quietly standing on when it appears in a benchmark, and they describe a very different animal from the employer firm most benchmarks have in mind.
Source: Internal Revenue Service, Statistics of Income Division, Sole Proprietorship Returns, Tax Year 2023, Table 1 (business receipts, selected deductions, payroll and net income by industrial sector), published March 2026 and downloaded from irs.gov on September 7, 2026. Figures cover nonfarm sole proprietorships filing Schedule C and are SOI estimates based on a sample of returns; money amounts are published in thousands of dollars and are converted here. Three cautions apply to every figure. First, these are MEANS across all filers, not medians, and the underlying distribution is heavily skewed – the mean is not the typical business. Second, Schedule C does not distinguish a full-time business from a side business, so a large share of these returns are part-year or part-time activity. Third, ‘net income less deficit’ nets profitable returns against unprofitable ones; the profitable subset is reported separately and is shown alongside wherever the two could be confused. Sector figures exclude the ‘unclassified establishments’ residual, which is a filing artefact rather than an industry.
Nearly a third reported no profit
The single most useful number in the table is not an average. Of the 31.1 million returns, 21,411,462 reported net income and 9,714,447 did not. That is 31.2% of all sole proprietorships reporting no profit for the year.
Those two groups do not look alike. The profitable ones averaged $78,995 in receipts and $24,790 in net income – roughly double the all-filer average profit. The rest pulled the mean down toward it.
This is why “average revenue” benchmarks mislead in both directions at once. They are too high to describe the median business and too low to describe a business that is genuinely working. If you are comparing yourself to $66,285, you are comparing yourself to a number that belongs to no one.
Reporting no net income for a year is not the same as failing. It includes start-up years, deliberate reinvestment and genuinely dormant filings as well as businesses losing money. What it rules out is reading $12,119 as a typical outcome.
Source: Internal Revenue Service, Statistics of Income Division, Sole Proprietorship Returns, Tax Year 2023, Table 1 (business receipts, selected deductions, payroll and net income by industrial sector), published March 2026 and downloaded from irs.gov on September 7, 2026. Figures cover nonfarm sole proprietorships filing Schedule C and are SOI estimates based on a sample of returns; money amounts are published in thousands of dollars and are converted here. Three cautions apply to every figure. First, these are MEANS across all filers, not medians, and the underlying distribution is heavily skewed – the mean is not the typical business. Second, Schedule C does not distinguish a full-time business from a side business, so a large share of these returns are part-year or part-time activity. Third, ‘net income less deficit’ nets profitable returns against unprofitable ones; the profitable subset is reported separately and is shown alongside wherever the two could be confused. Sector figures exclude the ‘unclassified establishments’ residual, which is a filing artefact rather than an industry.
A benchmark built only from businesses that make money is not a benchmark. It is a survivorship report.
The biggest top lines keep the least
Rank the 18 sectors by average receipts, then rank them by average net income. The two lists agree on a sector’s position in only 2 of the 18. Revenue rank tells you very little about income rank.
Take two of the largest sectors by number of filers. Retail trade averages $87,623 in receipts and keeps $3,610. Professional and technical services averages $63,957 – about 27% less revenue – and keeps $25,388, roughly 7 times as much.
Transportation and warehousing shows the same shape at the other end of the scale: $51,008 of receipts against $4,205 of net income. With 3.9 million returns it is one of the largest sectors on this list, and one where the cost of the vehicle sits between the revenue and the owner. The SOI table does not break the sector down further, so how much of it is driving and delivery is not something these figures can settle.
Across all 18 sectors the extreme case sits outside the chart below, which shows only the eight largest by number of filers. Accommodation and food services runs the second-highest average receipts of any sector, $114,842, and the lowest average net income of any sector, $2,199. At the opposite corner, Educational services has the smallest average revenue of any sector at $19,487 and still keeps more than Accommodation and food services, Retail trade or Transportation and warehousing.
The track is scaled to the largest average receipts on the chart, so the length of each bar is the gap between what a sector takes in and what it keeps. Read the printed figures rather than the gap widths when comparing two sectors. These are the eight sectors with the most filers, which is where most businesses actually are – not the eight highest or lowest on either measure. Accommodation and food services, the sector with the lowest average net income, has too few filers to appear here.
Source: Internal Revenue Service, Statistics of Income Division, Sole Proprietorship Returns, Tax Year 2023, Table 1 (business receipts, selected deductions, payroll and net income by industrial sector), published March 2026 and downloaded from irs.gov on September 7, 2026. Figures cover nonfarm sole proprietorships filing Schedule C and are SOI estimates based on a sample of returns; money amounts are published in thousands of dollars and are converted here. Three cautions apply to every figure. First, these are MEANS across all filers, not medians, and the underlying distribution is heavily skewed – the mean is not the typical business. Second, Schedule C does not distinguish a full-time business from a side business, so a large share of these returns are part-year or part-time activity. Third, ‘net income less deficit’ nets profitable returns against unprofitable ones; the profitable subset is reported separately and is shown alongside wherever the two could be confused. Sector figures exclude the ‘unclassified establishments’ residual, which is a filing artefact rather than an industry.
Where the odds of making anything are best
Of the three measures in this article, the profit split is the one that moves least. Average net income ranges across sectors by a factor of 16; the share of filers reporting any profit ranges by a factor of 1.54. Construction filers reported net income 79.7% of the time; Retail trade managed 51.9%, close to a coin flip. That is a real gap, but it is a narrower one than the money.
Note that Construction, with 79.7% of filers in profit, is not a high-margin sector: it averages $113,545 of receipts and keeps $16,839. Frequent small profits and rare large ones are different things, and a sector can be good at one and poor at the other.
Bars are the percentage of that sector’s returns reporting any net income. All bars are shown neutrally: the point of the chart is the range across sectors, not any one of them. Values are printed because the bars run from roughly half to four-fifths and the eye reads that spread as smaller than it is.
Source: Internal Revenue Service, Statistics of Income Division, Sole Proprietorship Returns, Tax Year 2023, Table 1 (business receipts, selected deductions, payroll and net income by industrial sector), published March 2026 and downloaded from irs.gov on September 7, 2026. Figures cover nonfarm sole proprietorships filing Schedule C and are SOI estimates based on a sample of returns; money amounts are published in thousands of dollars and are converted here. Three cautions apply to every figure. First, these are MEANS across all filers, not medians, and the underlying distribution is heavily skewed – the mean is not the typical business. Second, Schedule C does not distinguish a full-time business from a side business, so a large share of these returns are part-year or part-time activity. Third, ‘net income less deficit’ nets profitable returns against unprofitable ones; the profitable subset is reported separately and is shown alongside wherever the two could be confused. Sector figures exclude the ‘unclassified establishments’ residual, which is a filing artefact rather than an industry.
What to do with this if you are running one
Stop benchmarking against a mean. $66,285 is the average of a population in which 31.2% made nothing. It is not a target and it is not a par score.
Benchmark inside your sector, and against the profitable half. The gap between $12,119 and $24,790 is the difference between being measured against everyone who filed and being measured against everyone who made money. Only one of those is a useful comparison.
Watch the receipts-to-income gap in your own numbers. The sectors that look busiest keep the least. If your revenue is growing and your net income is not, you are in the Accommodation and food services pattern, and more volume will not fix it.
Read your own year against the split, not the average. A year with no net income puts you in a group of 9.7 million. That is worth knowing before deciding what it means about you.
Frequently Asked Questions
How many sole proprietorships are there in the United States?
The IRS Statistics of Income Division counted 31,125,909 nonfarm sole proprietorship returns for tax year 2023, published in March 2026. That is the number of Schedule C filings, so a person running two unincorporated businesses can appear twice, and it counts part-time and part-year activity on the same basis as full-time businesses.
What is the average revenue of a sole proprietorship?
Average business receipts were $66,285 per return in tax year 2023 – $2.06 trillion across 31.1 million returns. This is a mean, not a median, and the distribution is heavily skewed, so it sits well above what a typical filer reports.
What is the average profit of a sole proprietorship?
Net income less deficit averaged $12,119 per return. Among the 68.8% of returns that reported any net income, the average was $24,790. The two figures describe different populations and should not be used interchangeably.
How many small businesses lose money?
31.2% of nonfarm sole proprietorships – 9,714,447 returns – reported no net income for tax year 2023. Reporting no net income covers start-up years, reinvestment and dormant filings as well as trading losses, so it is not the same as failing.
Which sectors are most likely to be profitable?
By share of returns reporting net income, Construction led at 79.7%, followed by Educational services at 76.1%. Retail trade was lowest at 51.9%. Frequency of profit and size of profit are different measures: Construction ranks high on the first and mid-table on the second.
Published by The Lonely Entrepreneur — the community and coaching platform for entrepreneurs who are building alone. lonelyentrepreneur.com
This article is for educational purposes and is not a substitute for professional financial or legal advice.