A new understanding of small businesses: wages and gross output by industry and legal form of organization using firm receipts to classify business size, 1998–2003

There is no universal definition for “small business.” While number of employees is a popular metric, many small business statistics also use revenue, income, assets, or a combination of these characteristics to classify businesses by size (U.S. Census Bureau 2020; Organisation for Economic Co-operation and Development (OECD) 2018; Bandhiri and others 2019). In this paper, we use Internal Revenue Service (IRS) data categorized by firm-level receipts to estimate wages and gross output by business size, industry, and legal form of organization for 1998–2003. These statistics provide an alternative for understanding small business statistics compared to the Bureau of Economic Analysis (BEA) previous estimates of wages and gross output that use enterprise-level employment to classify business sizes (Highfill and Strassner 2017; Highfill and others 2020). Our break out of estimates by legal form of organization, including corporations, partnerships, and sole proprietors, provides an additional layer of detail to better understand the composition of small businesses.