This section relates to the place and behavior of the business firm, and to business initiative in the American economy. It includes data on the number, type, and size of businesses; financial data of domestic and multinational U.S. corporations and their foreign affiliates; business investment, expenditures, and profits; business sales and inventories; consumer cooperatives; and business failures. Additional business data may be found in other sections, particularly 29 and 30. The principal sources of these data are the Survey of Current Business, published by the Bureau of Economic Analysis (BEA); the Federal Reserve Bulletin, issued by the Board of Governors of the Federal Reserve System; the annual Statistics of Income reports of the Internal Revenue Service (IRS); The Failure Record Through (Year), issued by the Dun & Bradstreet Corporation, New York; and Fortune and The Fortune Directory, issued by Time, Inc., New York. Other sources are publications of the Securities and Exchange Commission (SEC), the Bureau of the Census, and the Administrative Office of the United States Courts. Business firms.—A firm is generally defined as a business organization under a single management and may include one or more establishments (i.e., a single physical location at which business is conducted). The terms firm, business, company, and enterprise are used interchangeably throughout this section. A firm doing business in more than one industry is classified by industry according to the major activity of the firm as a whole. The industrial classification is based on the Standard Industrial Classification (SIC) Manual (see text, page 388). The IRS concept of a business firm relates primarily to the legal entity used for tax reporting purposes. The IRS Statistics of Income reports present data, based on a sample of tax returns before audit, separately for sole proprietorships, partnerships, and active corporations. A sole proprietorship is an unincorporated business owned by one person. Sole proprietorships include the entire range of unincorporated, one-owner businesses, farms, and professional practices, from large enterprises with many employees and hired managers to the part-time operations in which the owner is the only person involved. A partnership is an unincorporated business owned by two or more persons, each of whom has a financial interest in the business. The "persons" could be individuals, estates, trusts, or corporations. A corporation is a business that is legally incorporated under State laws. The IRS recognizes many types of businesses as corporations, including jointstock companies; mutual and other insurance companies; and unincorporated associations such as business trusts, mutual savings and loan associations, certain partnerships, mutual savings banks, and cooperative banks. While many corporations file consolidated tax returns, most corporate tax returns represent individual corporations, some of which are affiliated through common ownership or control with other corporations filing separate returns. Assets and liabilities.—In its annual report, Statistics of Income, Corporation Income Tax Returns, the IRS presents balance sheet and income estimates for all active U.S. corporations. The Bureau of the Census issues the Quarterly Financial Report for Manufacturing, Mining and Trade Corporations (QFR), which presents quarterly income account and balance sheet data for manufacturing, mining, and trade industries. The Federal Trade Commission issues Working Capital of U.S. Nonlinancial Corporations, which presents data on components of current assets and liabilities of all nonfinancial U.S. corporations. Both of these reports were prepared by the Federal Trade Commission until responsibilities for QFR were transferred to Census beginning with the 4th quarter 1982 report. One of the most comprehensive measures of the investment position of the business sector (and the only measure adjusted to current replacement cost) is the BEA capital stock series. See Fixed Reproducible Tangible Wealth in the United States, 1925-79, and periodic updates in the Survey of Current Business. Income, profits, dividends, and taxes.—Several agencies, among them IRS and BEA, compile corporate income account data. These data, however, are not comparable because of differing methods of compilation. A reconciliation of the two can be found in table 8.12 of National Income and Product Accounts of the United States, 1929-76, and Survey of Current Business (normally the July issue), published by BEA. The IRS publishes financial data for all business enterprises. These data appear in Statistics of Income—Partnership Returns, Sole Proprietorship Returns, and Corporation Income Tax Returns. Supplemental reports published periodically present data on international income and taxes reported by U.S. corporations. The corporate data issued by BEA are a part of its national income and product accounts (see text, p. 427) and are defined as required for purposes of national income estimation. The primary sources for BEA estimates of profits, taxes, dividends, and undistributed profits are the original corporate tax returns submitted to IRS. Various adjustments of IRS data are required by the national income treatment—particularly with respect to profits which would be disclosed if all tax returns were audited; depletion; capital gain or loss; treatment of bad debts; measurement of income received from abroad; and intercorporate dividends—to make the figures comparable with other entries in the national income accounts. For a discussion of two types of adjustments (inventory valuation and capital consumption), see text, page 427. The BEA's corporate profits data also include net earnings of Federal Reserve banks, credit unions, private noninsured pension funds, and several quasi-government credit agencies not included in IRS data. Sources and uses of corporate funds.—These data (table 905) show capital requirements of corporations and the manner in which they are financed. Sources of funds should be equal to their uses. Certain discrepancies, however, interfere with this equality due to omission of (1) money accruing to corporations from an excess of sales over purchases of used plant and equipment (2) transactions in securities held as permanent investments except public offerings, and (3) net purchases of land. Also, the balance sheet data upon which many of the financial flow estimates are based are not fully comparable with the tax-retum based estimates of internal sources, or the establishment series underlying the figures on inventory change. Plant and equipment expenditures.—Estimates of actual and planned expenditures for new plant and equipment in the United States by most private, nonagricultural business firms are based on quarterly sample surveys conducted by the Bureau of Economic Analysis. For quarterly data, see current issues of the Survey of Cunent Business. For discussion of coverage, concepts, and methodology, see October 1980 issue of the Survey; for methodology used to derive the constant-dollar estimates, see the September 1981 issue of the Survey. Sales and Inventories.—Sales are estimated aggregate values, and inventories are book values at the end of the period. Sales signifies sales or shipments for retail and wholesale trade and billings or shipments for manufacturing. Trade inventories are valued at cost of merchandise on hand, while manufacturers' inventories are valued at approximate current costs or at book values, as reported by the manufacturer. Inventories (see table 901) are based on data from censuses (conducted every five years, for years ending in "2" and "7") and annual surveys. Monthly data for manufacturing appear in the Bureau of the Census Current Industrial Reports, Manufacturers' Shipments, inventories, and Orders, series M3-1; for data on retail and wholesale trade, see Section 30. Sales, assets, net Income, stockholder's equity, and total returns to investors.—Sales include service and rental revenues but exclude dividends, interest, and other non-operating revenues. All companies on the list must have derived more than 50 percent of their sales from manufacturing and/or mining. Sales of subsidiaries are included when they are consolidated. Assets are those shown at the company's year-end. Net income is shown after taxes and after extraordinary credits or charges when any are shown on the income statement. Stockholder's equity is the sum of capital stock, surplus and retained earnings at the company's year-end. Redeemable preferred stock is excluded when its redemption is either mandatory or outside the control of the company, except in the case of cooperatives. Total returns to investors include both price appreciation and dividend yield. Returns are adjusted for stock splits, stock dividends, recapitalizations, and corporate reorganizations as they occur. For further discussion, see Time, Inc., New York, NY, The Fortune Directory, May and June issues. Economic censuses.—The economic censuses constitute comprehensive and periodic canvasses of the Nation's industrial and business activities. The first economic census of the United States was conducted as part of the 1810 decennial census, when inquiries on manufacturing were included with the census of population. Minerals data were collected in 1840. The first censuses of construction and business were taken for 1929. An integrated economic census program was begun for 1954. In that year, the censuses covered the retail and wholesale trades, selected service industries, manufactures, and mineral industries. The economic censuses are taken at 5-year intervals covering years ending in "2" and "7". Statistical reliability.—For a discussion of statistical collection and estimation, sampling procedures, and measures of statistical reliability applicable to Census Bureau data, see Appendix III. Historical statistics.—Tabular headnotes provide cross-references, where applicable, to Historical Statistics of the United States, Colonial Times to 1970. See Appendix I. Source: Chart prepared by U.S. Bureau of the Census. For data, see table 906. Figure 18.2 Rate per 10,000 concerns Failure Rate NO. 868. NUMBER OF RETURNS, RECEIPTS, AND NET INCOME, BY TYPE OF BUSINESS: 1970 TO 1981 (Figures are estimates based on samples; see Appendix III. See also Historical Statistics, Colonial Times to 1970, series V 1-12. For further information regarding corporations, see tables 888-890) 1 See footnote 1, table 871. 2 See footnote 2, table 871. 3 Individually owned businesses and farms. Total taxable receipts before deduction of cost of goods sold, cost of operations, and net loss from sales of property other than capital assets. Includes business receipts, interest, and receipts not specified. 5 Includes constructive taxable income from related foreign corporations. No. 869. NUMBER OF RETURNS AND BUSINESS RECEIPTS, BY SIZE OF RECEIPTS AND TYPE OF BUSINESS: 1975 TO 1981 (See headnote, table 871, and Historical Statistics, Colonial Times to 1970, series V 1-12. For further information regarding corporations, see tables 888-890) Z Less than .05 percent. Business receipts. Active firms only. ? Includes firms with no receipts. Source of tables 868 and 869: U.S. Internal Revenue Service, 1975, Statistics of Income, Business Income Tax Returns, annual; thereafter, Statistics of Income, Sole Proprietorship Returns, annual; Statistics of Income, Partnership Returns, annual; and Statistics of Income, Corporation Income Tax Returns, annual No. 870. FEDERAL GOVERNMENT LOANS TO ALL SMALL BUSINESSES: 1970 TO 1983 (For years ending June 30 except, beginning 1977 ending Sept. 30. A small business must be independently owned and operated, must not be dominant in its particular industry, and must meet standards set by the Small Business Administration as to its annual receipts or number of employees) No. 871. Number Of Returns, Receipts, And Net Income, By Industry And Type Of Business: 1981 (Figures are estimates based on sample of unaudited tax returns; see Appendix III. Due to minor variations in estimating techniques, totals differ slightly from those shown in other IRS tables in this section. For further information regarding corporations, see tables 888-890. See Historical Statistics, Colonial Times to 1970, series V 42-53, for number of active corporations. Minus sign (-) indicates net loss] 1 Receipts from sales and services less allowances, rebates, and returns; excludes capital gains or losses, and investment income not associated with the taxpayer's business. - Net income (less deficit) is defined differently by legal form of organization, basically as follows: (a) Proprietorships: Total taxable receipts less total deductions, including cost of sales and operations; investment and other income are excluded: (b) Partnerships: Total taxable receipts less total deductions, including cost of sales and operations; investment and other income, except capital gains, are included; (c) Corporations: Total taxable receipts less total deductions, including cost of sales and operations; investment and other income, such as capital gains and income from foreign corporations considered received for tax purposes only, are included; net profit is before income tax. 3 Includes business not allocable to individual industries. * Includes only business receipts portion of finance, insurance and real estate industries, therefore industry components exceed the total. •'• Includes sanitary services. fl Includes total receipts for the finance, insurance, and real estate industry. No. 872. Number Of Returns, Receipts, And Net Income, By Industry, By Type Of Business, And By Size Of Business Receipts: 1981 [Number m thousands; receipts and net Income In millions of dollars. See headnote, table 871. See Historical Statistics, Colonial Times to 1970. series V 42-53, for number of active corporations. Minus sign (-) indicates net loss] 1 Individually owned businesses. * Includes businesses without receipts 'Includes businesses not allocable to individual industries * See footnote 1. table 871. * Less toss See footnote 2. table 871 * Includes sanitary services Source of tables 871 and 872: US. Internal Revenue Service, Statistics of Income, Sole Propnetorship Returns, annual; Statistics of Income. Partnership Returns, annual; and Statistics of Income, Corporation Income Tax Returns, annual |