National Federation of

This article demonstrates the importance of home-based businesses to the U.S. econ-omy. These firms produced 10 % of all receipts of the small-business sector in 1996, and their numbers have grown rapidly. This article examines what kinds of businesses are being run out of the home but concentrates on the subset that may be called truly entrepreneurial: the firms that gross at least $1million and have employeesworking in the home. Different sections of this article contrast the characteristics of firms run out of the homewith themotivations and backgrounds of their owners. The influence of the Internet on these entrepreneurial firms is also explored, as well as regulations that may be preventing a faster expansion of home-based activities. About 52%of the approximately 25million business tax returns filed in 1999 represented activities operated in a home-based setting. Using the nationally representative sample of 125,000 business owners from the Census Bureau’s Characteristics of Business Owners (U.S. Department of Com-merce, Bureau of the Census, 1997), I havemined a unique data source on the significance of these home-based activities. The sections of this article describe the different kinds of businesses oper-ated out of the home, the sources and amounts of start-up capital, the survival of these firms fro