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The Bureau of Economic Analysis (BEA) is developing new statistics to better track the economic health and contributions of the nation’s small businesses. Most U.S. businesses are small, and small businesses employ millions of Americans. Policymakers, businesspeople, and many others are seeking more information about how small businesses are faring within the overall economy. While some federal economic statistics are available by business size, the United States has no consistent and comprehensive measure of small business activity.

BEA’s researchers have produced experimental estimates about small business as they work to develop a satellite account – a set of specialized statistics that supplement our core national statistics, such as gross domestic product. The challenges include defining “small business” and accessing source data needed for a Small Business Satellite Account. See https://www.bea.gov/data/special-topics/small-business
 
May 2021 -- "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" https://apps.bea.gov/scb/2021/05-may/0521-small-business.htm
 
Defining small businesses as firms with less than $10 million in receipts, this paper provides BEA's first set of gross output and wage estimates disaggregated by business size and legal form of organization. In 2003, small businesses produced 28.1 percent of overall gross output. We find most gross output and wages for small firms in 2003 were generated by corporations (64 percent of gross output and 71 percent of wages), followed by sole proprietorships (23 percent of gross output and 17 percent of wages), then partnerships (13 percent of gross output and 12 percent of wages).
 
We also find using firm-level receipts to classify business size shows similar overall results to BEA's previous estimates of wages and gross output that used number of employees in an enterprise to classify business size (Highfill and Strassner 2017). Using both a receipts-based and employment-based definition to classify businesses by size, we find small businesses generated around 30 percent of private wages and gross output in 2002, while large businesses generated around 60 percent.
 
The main data source used in this paper is Statistics of Income (SOI) Integrated Business Data from IRS (IRS 2007). The “Table 2: Selected financial data on businesses” SOI data represent weighted estimates of various U.S. federal tax values aggregated by legal form, industry sector, and size of business receipts for 1998–2003. Data categorized by business size are only publicly available for this 6-year period.
 
Our estimates that use firm-level receipts to classify business size provide a new lens to view small business statistics compared to previous estimates that used employment to categorize business sizes. While these public IRS data are useful to understand certain economic activity across industries and business sizes for 1998–2003, additional and more timely data are needed for a comprehensive understanding of economic activity for small businesses. BEA is currently researching other ways to estimate small business statistics including using different size classes, datasets, and business characteristics. We invite all interested data users to send feedback about these estimates or suggestions for future research to SmallBusiness@bea.gov.
 
AEA staff note -- Current federal tax law allows BEA access only to corporate federal tax information (FTI), not FTI for sole proprietorships and partnerships. Consequently, to produce the above estimates, BEA must rely on IRS public use tables; 2003 is the latest year for which these tables are available. The U.S. Treasury Department's Green Book ("General Explanations of the Administration’s Fiscal Year 2022 Revenue Proposals," May 2021)  asks Congress to amend the tax law so that BEA is authorized to have access to proprietorship and partnership FTI (pp. 101-102). See https://home.treasury.gov/policy-issues/tax-policy/revenue-proposals

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