Jonathan Steiman

Companies Stay Home to Save Money

 

Feb. 15, 2005 -- With overhead costs climbing every year, businesses are always looking for a way to save. For smaller business, here is one alternative for overhead costs: stay at home, which is what more than one-quarter of American small businesses are doing.

According to a study released last week by the National Federation of Independent Businesses (NFIB), 26% of small businesses that have employees are headquartered in the company owner's home.

Such home-based businesses include contractors, insurance agencies, law firms, and repair shops, and they tend to be run from a spare room, garage or dining room table.

The majority of these businesses have fewer than ten employees, said William J. Dennis, the NFIB's senior research fellow.

The study also found that 59% of small businesses in America have one owner, whereas 27% have two. Owner-managers operated 85% of the firms surveyed.

The study also examined the legal status of small firms and found that a majority of them incorporate, with the sub-chapter S-corporation being the most popular at 31%. C-corporations and proprietorships are also popular, with 26% and 21%, respectively, of the firms surveyed choosing those structures. At just 6%, partnerships are the legal entity of last resort.