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How Much Does a Small Business Owner Make? Average Income by Category

The average small business owner makes $71,900 in the United States, according to Payscale’s 2017 data. The salary range is $29,365 to $156,227. Including bonuses, commission and profit sharing, this range becomes $30,039 to $179,299.

In this article, we’ll cover:

How Much Does a Small Business Owner Make?

While the average small business owner makes $71,900 in the United States, this figure can be misleading as it covers all industries. There are also variations based on state, experience and even gender.

The Small Business Administration (SBA) also offers more conservative statistics. The SBA estimated in 2015 that the average salary for owners of an incorporated firms was $49,804 and for owners of unincorporated businesses was $22.424.

This small business owner salary calculator will help you figure out your own salary.

Average Income by State

Small business owner salaries vary depending on state, according to the SBA.The economic conditions of your state can affect your earnings, as well as the cost of living.

To get a general idea, below are three of the richest and poorest states and how much small business owners make on average per year.

Richest States:

  • Maryland: incorporated: $52,926, unincorporated: $26,177
  • Alaska: incorporated: $55,530, unincorporated: $30,655
  • New Jersey: incorporated: $60,140, unincorporated: $29,212

Poorest States:

  • Mississippi: incorporated: $46,665, unincorporated: $22,279
  • Arkansas: incorporated: $44,609, unincorporated: $20,273
  • West Virginia: incorporated: $41,821, unincorporated: $19,317

Average Income by Gender

Average income of a small business owner is determined by gender, says the Houston Chronicle. Men earn more than women. Male small businesses owners make $42,575 to $96,111 annually and female small business owners take home $31,380 to $71,140 on a yearly basis.

Average Income by Experience

A small business owner’s experience level determines how much they make on average, according to Payscale.

A new small business owner with less than 5 years of experience earns about $49,000 on average (including bonuses, tips and overtime). A small business owner with 5 to 10 years of experience earns an average of $70,000 per year. Small business owners with 10 to 20 years of experience take home around $72,000 annually. And owners with more than 20 years of experience make about $99,000 per year.

Average Income by Industry

Depending on his or her industry, a small business owner’s average income will differ.

Here is a sample of average annual salaries by industry:

  • Floral designers: $27,610
  • Independent artists, writers and performers: $98,960
  • Graphic designers: $53,280
  • Software developers, applications: $106,710
  • Lawyers: $141,890
  • Carpenters: $49,630
  • Web developers: $74,110
  • Interior designers: $58,210
  • Photographers: $41,940
  • Event planners: $52,630

Data sourced from the Bureau of Labor Statistics.

People also ask:

Do Small Business Owners Make Money?

Many new small businesses have trouble keeping a positive net profit, according to Forbes, and few make a profit in their first year. This issue can be due to poor accounting, incorrect pricing or lack of online marketing.

Plus, small business owners only make money if their business survives—75% of new businesses make it a year, 69% make it two years and 50% get to five years. That’s about a 50-50 chance of survival, according to the U.S. Bureau of Labor.

As for how much they’re making, 31% of American small business owners had household incomes of $100,000 or more and 35% had household incomes between $50,000 and $99,999, says a Business Know-How survey.

Household income incorporates an owner’s salary, business profits (which small business owners usually take) and any additional income, such as a spouse’s income.

Do Businesses Make Profit in the First Year?

Most businesses don’t make a profit until their third year (and definitely not the first year), according to Fast Company. Breaking even is often the goal, especially since startup costs can significantly eat into profit.

That said, the exact nature of your business will determine your profitability timeline. Some fast-growing companies with little overhead will be profitable right away. Others that require a large startup investment will take years to become profitable.

How Much Does the Average CEO Make?

The average CEO working in one of the top 500 US companies made $14 million per year in 2017.

Taking into account all companies, average annual CEO pay is $161,051, according to Payscale. Salary range is $73,199 to $312,180. Including commission, bonuses and profit sharing, this range increases to $74,151 to $406,302.

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