Trade Business Profit Margins: IRS Sole Proprietor Data (Tax Year 2023)
The IRS Statistics of Income table provides a broad comparison point for sole proprietors who file Schedule C. It groups businesses by industrial sector rather than by individual trade. Use the figures below to understand the scale and composition of reported receipts and expenses within each sector.
Net margin here compares aggregate net income less deficit with aggregate business receipts. Average receipts and average net income divide those sector totals by the number of returns. They describe the full group, including businesses of different sizes and operating models, so they are not a forecast for a new business. The expense shares compare each reported deduction category with receipts. Some categories may overlap with how a business owner labels costs in their own books.
The sector comparison is most useful as context alongside your own job prices, payroll, overhead, and planned owner income. A sole proprietor’s pay for their own work is included in Schedule C net income, so the reported margin should not be treated as a return on capital after owner compensation. For planning, enter your own revenue and costs in the profit margin and break-even calculators. Review the source and limitations before applying these figures to a specific trade.
| Metric | Construction: Specialty trade contractors (NAICS 238) | Administrative and support services (NAICS 561) |
|---|---|---|
| Net margin | 15.7% VERIFIED DATA | 21.2% VERIFIED DATA |
| Average receipts per return | $102,220 VERIFIED DATA | $36,687 VERIFIED DATA |
| Average net income per return | $16,054 VERIFIED DATA | $7,769 VERIFIED DATA |
| Materials & supplies | 12.1% VERIFIED DATA | 4.4% VERIFIED DATA |
| Contract labor | 12.9% VERIFIED DATA | 7.6% VERIFIED DATA |
| Cost of labor + salaries and wages | 11.0% VERIFIED DATA | 11.2% VERIFIED DATA |
| Car and truck | 7.7% VERIFIED DATA | 10.5% VERIFIED DATA |
| Supplies | 6.5% VERIFIED DATA | 5.8% VERIFIED DATA |
| Depreciation | 4.3% VERIFIED DATA | 5.4% VERIFIED DATA |
| Insurance | 1.8% VERIFIED DATA | 1.8% VERIFIED DATA |
| Advertising | 0.6% VERIFIED DATA | 1.2% VERIFIED DATA |
Schedule C net income is before any owner salary: sole proprietors do not deduct pay to themselves, so net margin here includes the owner's compensation for their own labor.
Sector-level figures: the table does not split electricians, plumbers, roofers etc.; NAICS 238 covers all specialty trades, NAICS 561 covers landscaping, pest control and building services together with unrelated admin services (staffing, security, travel).
Methodology
- Net margin uses net income less deficit divided by business receipts.
- Per-return averages divide sector totals by the number of returns.
- Expense shares divide reported expense categories by business receipts.
- The source covers sole proprietorship returns and sector-level estimates; individual trades are not separately reported.