Incorporated, non-agricultural self-employment in the U.S. grew from roughly 4.1 million to 5.6 million between 1998 and 2008. Unincorporated non-agricultural self-employment remained relatively flat, going from roughly 9.0 million in 1998 to 9.2 million in 2008.
Non-agricultural employment is often used when looking at U.S. self-employment trends. This is because it excludes the long term, steady decline in the number of small farms and agricultural employment.
As the chart below shows, the shifts in self-employment have led to a steady increase in the percentage of incorporated self-employed relative to the total number of self-employed.
Total self-employment during this period grew from roughly 13 million to 14.8 million (differences due to rounding). As our post from yesterday shows, the percentage of self-employed compared to total employment has remained somewhat stable over the last decade.
The growth of incorporated self-employed comes from both new small businesses as well as unincorporated self-employed choosing to incorporate.
There are many reasons unincorporated self-employed choose to incorporate. Tax benefits, liability protection and customer expectations are all good reasons for the self-employed to create a corporate entity.
Creating a corporate entity can also help the self-employed to gain access to credit and protect their consumer credit rating.
And, of course, it much easier and cheaper to set up a corporation today than it was in the past. LLCs in particular require little cost and effort to set up and administer.
We expect incorporated self-employment to continue to grow its share of total self-employment over the next few years.