Small Business Facts

• According to the U.S. Small Business Administration, America has over 25 million small businesses.
• These businesses employ more than 50 percent of the private work force, generate more than half of the nation's gross domestic product, and are the principal source of new jobs in the U.S. economy.
• Approximately 900,000 new small businesses are started every year.
• Small businesses account for 99.7 percent of America's employers.

• The average business owner spends 22 hours a week on human resource issues, including payroll, benefits, health care and tax issues.
• By some estimates, 60 to 80 percent of an HR department’s time is spent handling “administrative,” or “blocking and tackling.” This paper-pushing is costly and inefficient—to the tune of an estimated $1,500 per employee, per year.

• Through the payroll withholding system, workers and payroll professionals contribute, collect, report, and deposit approximately $1.2 trillion — or 66% of the annual revenue of the U.S. Treasury — according to the American Payroll Association.
• America’s 135 million workers, including 7 million young adults between the ages of 16 and 19 who are receiving their first paychecks, pay the $1.2 trillion in payroll tax proceeds mentioned above.
• 75 percent of small businesses still handle payroll operations in-house.
• At any given time, 25 percent of all business owners are dissatisfied with their payroll method.
• According to the IRS, four out of ten small businesses are fined an average of $845 yearly for various violations of payroll rules.
• The outsourced payroll industry is growing at 20% per year. Over 75 percent of companies that outsource payroll have less than $250 million in annual revenue, according to a study completed by The Outsourcing Institute in New York.
• 251 million W-2s are submitted each year, representing 145 million workers and 6 million employers.
• 48 percent of small businesses believed there were less than 10 government regulations that affect their businesses. In fact, small business owners had to comply with an average of more than 50 government regulations in 1998 - many of them new or recently revised - in order to satisfy their tax obligations.
• Small business owners estimate that they spend more than 50 hours a year calculating payroll. This means that processing payroll consumes more than a full work week each year, taking time away from managing a small business.
• Norman Goldstein, the Social Security Administration's senior financial executive, looked at domestic W-2 preparation in 1998 and determined that out of some 230 million W-2s submitted, about 21 to 22 million W-2s had name or number mismatches. According to Goldstein, an accurate W-2 costs about 32 cents to process; an inaccurate W-2 costs upwards of $300 to resolve and post the data.

• Sixty-four percent of employees are paid through direct deposit.
• There is growing interest in amending state laws to allow companies to make direct deposit mandatory. Sixteen states currently allow for mandatory direct deposit.
• According to the American Payroll Association, more than 4 million paychecks are lost or stolen each year. Lost paycheck replacement costs are estimated to be $48 million annually
• Companies can save up to $1.25 per payment using electronic disbursement instead of checks (www.directdeposit.org).
• The chance of having a problem with a check is 20 times greater than with Direct Deposit (www.directdeposit.org).
• Studies show that employees may spend the equivalent of three work days each year going to the bank (www.directdeposit.org).

• 2600 BC: First historic record of payroll. Babylonians use clay tablets to record labourers wages received and hours worked.
• 200 BC: Origin of the word "salary" comes from the word "salarium," meaning "saltmoney." Roman soldiers were paid their allowance in salt, a valuable seasoning and preservative.
• 1529: First use of the word "payday" in English print.