Why more people run a business from home, and who it suits
Bizer · 2026-10-01
About half of all US businesses are run from someone's home. That is the SBA Office of Advocacy's figure, in its frequently asked questions about small business, and it falls to about a quarter if you count only businesses with employees: 24 percent of employer firms were home based in the Census data from 2016 that the Office's 2021 edition cites. The home business is not a trend. It is the normal shape of a small business in this country.
What has changed is how many new ones there are.
How many new businesses are starting?
The Census Bureau's Business Formation Statistics count applications for a federal tax ID that look like real businesses. Add up its monthly, unadjusted figures and you get about 3.5 million applications in 2019, about 4.4 million in 2020, and about 5.7 million in 2025 (read on 1 October 2026). The jump in 2020 never reversed.
Applications are not businesses that last, and the Census Bureau does not record where they are run from. But young firms are the most likely to be at home. In the same SBA data, 32 percent of employer firms two years old or younger were home based, against 17 percent of firms aged 16 or more. More new businesses means more businesses at the kitchen table.
Why does it keep happening?
Cost comes first, by a distance. A storefront lease is the fixed cost that sinks a lot of first-year businesses, because it is due whether or not the month was any good. Working from home turns it into a cost you already pay, and the IRS lets you deduct part of it. As of the 2025 tax year, the simplified method is $5 per square foot of space used regularly and exclusively for business, up to 300 square feet, so $1,500 at most. The regular method can be worth more, but it takes real records and brings depreciation recapture when you sell the house.
The tools got cheap. Payments, invoicing, video calls, scheduling and a decent website are monthly subscriptions now, not things you buy up front. A bookkeeper, designer or consultant needs nothing a customer has to see.
And a lot of work happens at the customer's place anyway. In that 2016 data, 47 percent of construction firms and 45 percent of business services firms were home based. A plumber's office was always the truck.
Is it right for you?
It suits you if:
- customers never need to come to you, or come rarely and by appointment
- the work is done on site, online or on the phone
- you need fixed costs near zero for the first year
- you can close a door at the end of the day, physically
It does not suit you if:
- walk-in traffic is how customers find you, which covers most food, retail and salons
- you will hold stock that outgrows a closet within six months
- you plan to hire people who need to work beside you
- you rent, and the lease forbids business use
That last one ends more home businesses than people expect. Read the lease.
What does it cost you?
The rent you save is real. So is the bill that replaces it, and it arrives in pieces.
Zoning. Most cities and parishes allow a home occupation with conditions: no sign, limited customer visits, no employees on site, nothing stored outside. Ask the planning office before you print the address on a truck door. A homeowners' association's covenants can be stricter than the city.
Insurance. A standard homeowner's policy generally excludes business property and business liability. A client who trips on your steps while dropping off paperwork can fall between your home policy and the business policy you never bought. Ask your agent for a home business endorsement or a business owner's policy, and get the answer in writing.
Privacy. Your home address on a website, a map listing or a state filing is public. A mailbox service or a registered agent's address keeps it off the record, and a business that serves customers at their location can usually hide its street address on its Google listing.
You. The work never leaves the house. Keep fixed hours and a room used only for work. The IRS deduction requires exclusive use anyway, so the rule that protects your evenings also protects the deduction.
When should you move out?
When the home is costing you sales. Not before.
The signals are concrete: you turn down work because there is no room to do it, a hire needs a desk, or customers ask where to find you and the honest answer puts them off. Signing a commercial lease before then trades flexibility for a monthly bill that does not care how slow the month was. If you are still deciding what kind of business to start at all, the ten steps in order are the place to begin.
What is uncertain
The SBA's detailed home-based figures rest on Census data from 2016, the most recent breakdown of this kind we could find. The share has very likely risen since remote work spread in 2020, but no federal source we found measures by how much, so we will not guess. The headline numbers here come from the Census Bureau's Business Formation Statistics and the IRS page on the simplified home office deduction. Both are worth checking before you rely on a figure.
