Entrepreneurs can earn up to 70% more than salaried employees per year

Opening your own business can result in a much higher income than having a fixed job with a stable salary, but many entrepreneurs do not enjoy this award, according to a recent Federal Reserve Bank study.

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In an analysis of tax and income data from 2000 to 2015, the study found that the average entrepreneur earned $ 27,000 a year (in dollars 2012) at the age of 25 – slightly less than the $ 29,000 of an employee employee of the same age.

But these workers soon exchanged places, and at age 30 entrepreneurs earned $ 55,000 against $ 45,000 of wage earners, or 22% more.

As they aged, the average difference of income between them increased, and at 55 the self -employed earned 70% more: $ 134,000 against $ 79,000 per year.

The study also noted that entrepreneurs often have other sources of income when starting, whether by salaried employment or other business, allowing them to have positive gains even if their new companies have not yet made a profit.

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But data on average income also hides great inequality among self -employed workers. In addition, 80% of self -employed income came from those who earned $ 100,000 per year or more.

“Many mainly self -employed earned less during the sample years than their salaried peers with similar characteristics, but in the aggregate this subgroup has a much lower participation of total income than those who earned more than their peers,” said the study – written by Anmol Bhandari, Ellen R. McGrattan, Tobey Kass, Evan Schulz and Thomas J. May.

The findings arise as small businesses, especially in technical areas, have shown profitable opportunities for investments from other entities in a company.

By investing in business and partnering with its founders, some firms can help climb companies and increase gains.

What motivates the choice to undertake?

Other discoveries of the study of Minneapolis Fed sought to demystify some ideas about self -employed, such as being “nozzle workers seeking flexibility, maladjusted avoiding periods of unemployment, inventors seeking risk capital, or tax evaders reporting incorrectly.”

For example, entrepreneurs in general have not received a large amount of money or had to contract high debt to start their business. In addition, the data showed that those who migrated to autonomous work already earned more than their salaried peers, contrasting with the idea that they were forced to start their own business.

“Most entrepreneurs who persist in business have higher income growth than wage employment,” said the study. “With protection against the most adverse shocks, we find that autonomous work is an attractive option and not strange from the point of view versus return, as thought before.”