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The top 1% of Earners Are Entrepreneurs — But Not the Ones You See On TV
Pro Tip: If you want to earn a good living on your terms, first master a rare and valuable skill.
The entrepreneurs you see in Forbes and The Wall Street Journal are not representative of most top-earning business owners.
A recent study called Capitalists in the Twenty-First Century used IRS data to break down exactly how entrepreneurs in the top 1% to .1% earn their living. According to the study, almost none of these entrepreneurs look like Elon Musk, Mark Zuckerberg, or your favorite Shark Tank personality.
In many ways, the top 1% of earners among entrepreneurs are much more, well, ordinary. Their success is subtle, underplayed. They run the businesses you see around town. They are seldom in the news. They don’t spend most of their week day-trading cryptocurrencies and stocks. Their companies aren’t among the Fortune 500.
So, who are they?
What it takes to be in the top 1% income earners
According to the study, the top 1% income means that these business owners earn at least $390K per year. There are about 1.1 million entrepreneurs in the U.S. who fall into this 1% category.
Most 1% earners run what are called pass-through businesses. This means their business revenue is taxed only when it passes through to the owner as personal income (through a combination of W2 wages and distributions).
Here is what most successful entrepreneurs really look like:
1. Most successful entrepreneurs run professional service businesses
The study authors wrote, “Typical firms owned by the top 1–0.1% are single-establishment firms in professional services (e.g., consultants, lawyers, specialty tradespeople) or health services (e.g., physicians, dentists).”
I was excited to read this part. As a freelance copywriter, my business falls into this category of professional services business. It’s encouraging to see how common this path is to success — because you’d never know it by following business news.
