Unemployment Boosts Entrepreneurship

NEW YORK (MainStreet) — The number of businesses without paid employees in the U.S. reached 22.7 million, which marks the third straight annual increase, according to statistics released by the U.S. Census Bureau.

"It indicates a fall in quality full-time jobs," said Margie Baldock, author of the book The Mother Lode Manifesto (Star Fire Books 2013). "More new job opportunities are part-time or lowly paid jobs. As a result, professionals are being forced to become self-reliant financially just to make ends meet."

Non-employer businesses are those with no paid employees and annual business receipts of at least $1,000 that are subject to federal income taxes.

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"It's never been easier to start a business," said Paul Schwada, director with Locomotive Solutions. "The tools that are now in place eliminate many barriers to entry and when a business stays non-employee it avoids added hassles."

Those hassles include taxes being levied on businesses who do employ full time workers.

"It is becoming increasingly expensive for small business operators to afford employees in the traditional method," Baldock told MainStreet. "Employers must not only provide holiday time and pay but also expensive benefits. Given the new Obamacare laws I would expect this trend to continue for some time to come."

Tools that make it easier to operate a staff-less business include the internet, social media and accounting software.

"Often the first step in becoming financially self-reliant is becoming a one-person small business and then growing from that base," Baldock said.

While California still has the largest number of non-employer businesses at 2.9 million, Florida had the largest increase in with 57,978 added.

"If California has a greater number of non employer businesses, it may be because the state has more oppressive legislation for business owners to follow when it comes to employment," said Baldock.