The latest small business tax statistics from the IRS cover 31,125,909 nonfarm sole proprietorship returns for tax year 2023, reporting $2.06 trillion in business receipts and $377.2 billion in net income. The number most owners find useful is a different one: 31.2% of those returns reported no net income at all.
How many small businesses file, and what do they report?
For tax year 2023 the IRS Statistics of Income program counted 31,125,909 nonfarm sole proprietorship returns — Schedule C filings attached to a Form 1040. Together they reported $2,063,192 million in business receipts, which is just over $2.06 trillion, and $377,211 million, or roughly $377.2 billion, in net income less deficit.
Divide through and the scale becomes concrete: the average nonfarm sole proprietorship reported about $66,285 in receipts and about $12,119 in net income for the year. That is the arithmetic mean across all filers, and it is pulled upward by a relatively small number of large operations, so most filers sit below it. It is a useful sense of scale rather than a benchmark.
One definitional point worth keeping straight: these are sole proprietorships only. Partnerships and S and C corporations file separately and are not in this table, so this is not a count of every small business in America. It is, however, the single largest and most numerous category of them.
Nearly a third of sole proprietorships report no net income
Of the 31,125,909 returns filed, 21,411,462 reported net income. That leaves 9,714,447 returns — 31.2% of the total — that reported none. Close to one in three sole proprietorships either broke even or lost money in the year, and that is a normal year, not a downturn.
The size of the losses is visible in the gap between two figures in the same table. Businesses with net income reported $530.8 billion of it. Across all filers, net income less deficit was $377.2 billion. The difference — roughly $153.6 billion — is what the loss-making returns subtracted. Profitable sole proprietorships averaged about $24,790 in net income each.
For an owner reading this while filing, the useful takeaway is that a year without net income is common enough to be unremarkable to anyone who reads these filings for a living. It is not, however, neutral when you apply for funding: most revenue-based funders read bank statements rather than tax returns precisely because deposits show cash coming in even when the return shows no profit. If your return and your deposits tell different stories, being able to explain why is worth more than either document alone.
Which industries file the most returns, and which bring in the most
The two rankings are not the same, which is the interesting part. By number of returns the largest categories are other services (4,066,467), transportation and warehousing (3,922,574), professional, scientific and technical services (3,912,417), construction (3,368,860) and administrative and support services (3,159,026).
By business receipts the order changes sharply. Construction leads at $382.5 billion, followed by professional, scientific and technical services at $250.2 billion, transportation and warehousing at $200.1 billion, retail trade at $199.5 billion and other services at $164.8 billion.
Set the two side by side and you can see revenue per filer diverge. Construction files roughly a sixth fewer returns than transportation and warehousing but reports nearly double the receipts. Transportation is full of owner-operators running a single vehicle; construction contains far more businesses carrying crews, equipment and materials. That difference in capital intensity is exactly why the same funding product suits one and not the other — and it lines up with what our survival rates by industry show about how differently the odds run by sector.
What the deductions say about how small businesses fund themselves
Three lines in the same IRS table describe how these businesses pay for the things they use. Sole proprietors deducted $79.5 billion in depreciation, $16.9 billion in rent paid on machinery and equipment, and $15.1 billion in interest in tax year 2023. Payroll deductions came to $175.0 billion.
Read together, those numbers show the buy-versus-rent decision playing out across millions of businesses. Depreciation is what you claim on equipment you own; equipment rent is what you pay when you do not own it. At roughly a five-to-one ratio, ownership is far more common — and owning equipment is usually what equipment financing makes possible for a business that cannot pay cash. The interest line is the cost of the borrowing that sits underneath a lot of it.
Two things are worth saying plainly here. First, we are a funding broker, not a tax adviser: whether any particular cost is deductible for your business depends on facts we cannot see, so ask a tax professional rather than acting on a national total. Second, if the timing of tax payments is what is squeezing you rather than the amount, that is a cash flow problem with cash flow solutions — a line of credit or working capital funding is designed for exactly that gap. The Broker Shop is a broker, not a funder: one application goes to the funders whose guidelines you meet, it is free to apply, and checking your options won't affect your credit score.
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See What I Qualify For →The bottom line: IRS filings show 31.1 million sole proprietorships reporting $2.06 trillion in receipts, with 31.2% reporting no net income at all — which is why most funders read bank statements rather than tax returns.
Sources: Internal Revenue Service — SOI Tax Stats, Nonfarm Sole Proprietorship Statistics · IRS SOI Table 1: Nonfarm Sole Proprietorships — Business Receipts, Selected Deductions, Payroll, and Net Income, by Industrial Sectors, Tax Year 2023
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