The IRS recently released the 2013 data on sole proprietors. This data covers business receipts, deductions, and net income reported by individual taxpayers on Schedule C of Form 1040.
This is how most independent workers and small businesses report business income for tax purposes.
In 2013 there were a bit over 24 million sole proprietors reporting about $1.34 trillion in gross business receipts. In 2012 there were 23.5 million sole proprietors who reported $1.30 trillion in gross receipts.
While looking through the data we were struck by the extent of the growth in the usage of contract labor - contingent workers such as freelancers, independent contractors, temps, etc. - by sole proprietors.
As the chart below shows, sole proprietor contract labor expenses increased 38% between 2010 and 2013.
Over the same period salary and wage expense increased only 10.7%. In 2013 contract labor was 36% of total labor costs, up from 31% in 2010 and just 20% in 2003.
The use of contract and contingent labor by businesses large and small continues to grow and we expect this trend to continue.