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Impact of Location on Net Income: A Comparison of Homebased and Non-Homebased Sole Proprietors
Using 2002 sole proprietorship data, the impact of
location on net income is analyzed using a sample
of 1.6 million profitable nonfarm sole proprietorships
that took a home office business deduction (homebased
businesses) and 1.9 million that deducted rent for other business property (non-homebased businesses). Findings reveal that in 2002, homebased businesses earn lower average receipts ($62,523) and net income ($22,569) than businesses operated in rented space. Homebased firms gain a higher return on gross revenues compared with non-HBBs.