The 1099 Earnings Report

Independent work is usually measured by headcount, rather than income. In an effort to better understand what these businesses actually earn, we analyzed revenue and expense data from thousands of 1099 businesses, freelancers, and independent contractors across the country, then broke the results down by industry the way a quarterly earnings report breaks down a market. This first edition is a benchmark snapshot of where independent earnings stand today, which industries pay, and which ones quietly run at a loss.

The Headline Numbers

Independent business income is modest at the center and dramatically uneven at the edges. Among businesses that report both revenue and expenses, the typical industry median sits in the low five figures. Half of the 26 industries we tracked posted typical revenue above the $11,700 midpoint, and half below.

The more revealing number is margin. Across most service industries, the median 1099 business reports 55 to 80 cents of expenses for every dollar of revenue. But in nearly half of the industries we measured, that figure climbs above $1.00, meaning the typical operator spends more than it brings in. That pattern is not random and tracks closely with what some industries sell.

Sector Performance: Who Earns the Most

The top of the table is dominated by skilled services and asset-light work.

*Expense ratio is the median of each business's own expense-to-revenue ratio and is not derived from the typical revenue and typical expense columns shown.

Engineering leads at a typical $40,989 in revenue against just $4,293 in expenses, the strongest margin of any major industry analyzed. Animal Services, a category that includes veterinary and pet care independents, is a quieter standout, with a typical $39,253 in revenue and unusually consistent results across operators. Healthcare, Transportation, and Technology round out the leaders.

What these industries have in common is that the work itself is the product. There is little inventory to finance and few goods to mark down, so more of each dollar earned stays in the business.

Margin Watch: Who Keeps What They Earn

The bottom of the margin table tells the opposite story. Apparel, E-Commerce, Retail, Manufacturing, and Hospitality all report median expenses that exceed median revenue, with expense ratios between 1.6 and 3.0. The typical apparel business reports nearly $3.00 in expenses for every $1.00 of revenue.

This is the central finding of the report. Across all 26 industries, typical revenue and the expense ratio carry a strong negative rank correlation of -0.69. Industries that earn the most also keep the most, and industries that earn the least tend to spend the most to do it. The dividing line is inventory. Businesses that buy, hold, and resell physical goods carry costs whether or not the goods sell, while businesses that sell time or expertise do not.

One margin caveat: In the lowest-revenue industries, a ratio above 1.0 often reflects early-stage or part-time ventures with real startup costs and minimal sales, not failing companies. A side business with $200 in supplies and $80 in sales posts a ratio of 2.5 while being perfectly healthy as a side project. Margin should be read alongside scale, not in isolation.

The Spread: Steady Income or a Lottery

Typical figures hide how differently these industries behave at the top. We compared each industry's common earner to its top earners, defined as the 90th percentile.

The high-margin service industries are compressed. In Animal Services, top earners make only about 2.3 times as much as the typical operator. Healthcare, Transportation, Consulting, and Entertainment all remain within a 5 to 7 times band. Income there is not only higher, but is more predictable.

The low-margin product industries are the opposite. In Finance, top earners will clear roughly 125 times the typical operator. Agriculture, E-Commerce, Manufacturing, and Apparel all show top-to-typical gaps of 28 times or more. These industries produce a handful of large winners sitting above a wide base of very small operators competing for what's left. For most participants, the income is minimal, and for a few, it is substantial.

For anyone deciding where to devote independent effort, the implication is clear. Service and knowledge work offer a higher and more reliable floor, while product and inventory work offer a low floor with a long shot at a high ceiling.

What This Means for Independent Earners

The data points to a clear divide in the independent 1099 economy. Skilled-service businesses earn more, keep more of what they earn, and earn it more reliably. Product-based businesses face thinner margins and higher variance, which makes expense discipline and accurate bookkeeping the difference between a profitable year and a paper loss.

Whatever the industry, the operators who track expenses as carefully as revenue turn independent work into durable income. Clean books and a proactive tax strategy are what let a strong revenue year actually become a strong earnings year. To see where your own business stands, explore our small business tax and advisory services for a clearer picture of your numbers throughout the year.

Methodology

Figures reflect 1-800Accountant's analysis of self-reported revenue and expense data across thousands of 1099 businesses, freelancers, and independent contractors. All revenue and expense figures are medians among businesses reporting both revenue and expenses, which is why they describe a typical active earner rather than every filer. The expense ratio is the median of each business's own expense-to-revenue ratio. Industries with fewer than 100 businesses were excluded, along with non-specific category buckets. This edition is a single-period benchmark and does not measure growth over time. For background on how independent businesses report income, see the IRS guidance on Schedule C and self-employment tax, or the Small Business Administration.