Methodology

Read the full methodology behind the Intuit QuickBooks Small Business Index by downloading the PDF below.

The Small Business Index is a collaboration between Intuit QuickBooks and an international team of economists led by Professor Ufuk Akcigit.

Summary methodology

What is the Small Business Index?

The Small Business Index is a rigorous monthly measure of the health of the small business economies of the US, Canada, and the UK. The Index shows current revenue, employment, or job vacancy levels at small businesses, and the change since the previous month, based on a total worldwide sample of 557,000 small businesses.

The Index is published at the beginning of every month with the following data insights available through the end of the previous month:

• US: revenue and employment at small businesses with 1 to 9 employees at the national, regional, and sector levels; and for 20 states.
• Canada: employment at small businesses with 1 to 19 employees at the national, regional, and sector levels.
• UK: employment and job vacancies at small businesses with 1 to 9 employees at the national, regional, and sector levels.

When is the Small Business Index published?

The Index is published at the earliest opportunity every month, usually within the first few days of the month, with data insights from the previous month. For example, when the Index is updated at the beginning of March, it shows small business revenue, employment, or job vacancy data for the whole of the month of February and the monthly change since January. In addition to the monthly updates, more in-depth analyses are published on a quarterly and annual basis to provide more context and consider longer-term trends.

All publication dates are available from the Publication Calendar. Please note that dates may be subject to change.

How does the Small Business Index help small businesses?

The Index provides valuable new insights for small businesses to use to benchmark themselves against their peers and competitors. It also helps to close some of the gaps in official statistics. For example, in the US, statistics on small business revenue are published once every five years and monthly employment statistics for small businesses have a delay of up to nine months. The Index provides estimates of what official statistics will show when they are available. By doing so, it can help to inform policies affecting small businesses, which are vital to the current and future health of the economy but often underrepresented in economic data. By shining a brighter light on small businesses, Intuit hopes to increase their growth and success rates throughout the US, Canada, and the UK.

What sets the Small Business Index methodology apart?

The Index methodology stands out from other reports by being calibrated against official statistics, focusing exclusively on small businesses, and using large samples of administrative data, not survey data. Purpose-built economic models developed by Professor Akcigit and his team normalize anonymized QuickBooks data against official government statistics to reflect the general population of small businesses in the US, Canada, and the UK. This robust methodology also provides a clear delineation between Intuit's small business customers and the small business community at large.

Find out more about the data insights, sample sizes, and calculations below.

What does the Small Business Index include?

Please note that the Small Business Index is seasonally adjusted and adjusted for inflation. It uses official statistics to reflect employment, job vacancies, or revenue at all corresponding small businesses in the US, Canada, or the UK—not just those that use QuickBooks.

US

For small businesses with 1-9 employees, the Index shows the following metrics at the national, regional, sector, and state levels (currently for 20 states):

• Monthly employment growth rates: Percent change in total number of employees since the previous month.
• Monthly employment levels: Total number of people employed by these businesses and the increase or decrease compared to the previous month.
• Monthly revenue growth rates: Percent change in average real revenue per small business since the previous month.

• Monthly revenue levels: Average real revenue per small business in 2017 dollars and the increase or decrease compared to the previous month.

Canada

For small businesses with 1-19 employees, the Index shows the following metrics at the national, regional, and sector levels:

• Monthly employment growth rates: Percent change in the number of people employed by these businesses since the previous month.
• Monthly employment levels: Total number of people employed by these businesses and the increase or decrease compared to the previous month.

UK

For small businesses with 1-9 employees, the Index shows the following metrics at the national, regional, and sector levels:

• Monthly employment growth rates: Percent change in the number of people employed by these businesses since the previous month.
• Monthly employment levels: Total number of people employed by these businesses and the increase or decrease compared to the previous month.
• Monthly job vacancy growth rates: Percent change in the number of open positions at these businesses since the previous month.
• Monthly job vacancy levels: Total number of job vacancies at these businesses and the increase or decrease compared to the previous month.

Which geographic regions does the Small Business Index cover?

US

For the US, data insights are aggregated into eight Bureau of Economic Analysis (BEA) regions:

• Far West: Alaska, California, Hawaii, Nevada, Oregon, Washington.
• Great Lakes: Illinois, Indiana, Michigan, Ohio, Wisconsin.
• Mideast: Delaware, District of Columbia, Maryland, New Jersey, New York, Pennsylvania.
• New England: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont.
• Plains: Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota.
• Rocky Mountain: Colorado, Idaho, Montana, Utah, Wyoming.
• Southeast: Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, West Virginia. 
• Southwest: Arizona, New Mexico, Oklahoma, Texas.

In addition, aggregated data insights are available for the following 20 states:

• Arizona
• California
• Colorado
• Florida
• Georgia
• Illinois
• Indiana
• Michigan
• Minnesota
• Missouri
• New York
• North Carolina
• Ohio
• Oregon
• Pennsylvania
• Tennessee
• Texas
• Virginia
• Washington
• Wisconsin

Canada

For Canada, data insights are currently available for the following Statistics Canada regions and provinces:

• Atlantic Region: Newfoundland and Labrador, Prince Edward Island, Nova Scotia, New Brunswick.
• British Columbia
• Ontario
• Prairie Provinces: Manitoba, Saskatchewan, Alberta.
• Quebec

Note: The Northern Territories region (Nunavut, Northwest Territories, Yukon Territory) is not currently included in the Index.

UK

For the UK, data insights are currently available at the country level for each of the four nations:

• England
• Northern Ireland
• Scotland
• Wales

In addition to the four nations, data insights are available in all nine regions of England:

• North East
• South East
• East of England
• London
• West Midlands
• East Midlands
• South West
• North West
• Yorkshire and the Humber

Which industry sectors does the Index cover?

US

In the US, data insights are available for the following 12 sectors and groups of sectors, as defined by the North American Industry Classification System (NAICS):

• Agriculture, natural resources and mining (NAICS 11; 21)

• Construction (NAICS 23)
• Education and health services (NAICS 61-62)
• Finance and real estate (NAICS 52-53)
• Information (NAICS 51)
• Leisure and hospitality (NAICS 71-72)
• Manufacturing (NAICS 31-33)
• Professional and business services (NAICS 54-56)
• Retail trade (NAICS 44-45)
• Transport and warehousing (NAICS 48-49)
• Utilities (NAICS 22)
• Wholesale trade (NAICS 41-42)

Note: NAICS sectors 81 (other services, except public administration) and 92 (public administration) are not currently included in the Index.

Canada

In Canada data insights are available for the following 13 sectors and groups of sectors, as defined by the North American Industry Classification System (NAICS):

• Accommodation and food services (NAICS 72)
• Agriculture, natural resources and mining (NAICS 11; 21)

• Business services (NAICS 55-56)
• Construction (NAICS 23)
• Education (NAICS 61)
• Finance and real estate (NAICS 52-53)
• Health care and social assistance (NAICS 62)
• Information; arts and recreation (NAICS 51; 71)
• Manufacturing (NAICS 31-33)
• Professional services (NAICS 54)
• Transport and warehousing (NAICS 48-49)
• Utilities (NAICS 22)
• Wholesale and retail trade (NAICS 41-42; 44-45)

Note: NAICS sectors 81 (other services, except public administration) and 92 (public administration) are not currently included in the Index.

UK

In the UK, data insights are available for the following 13 sectors (also known as “sections”) and groups of sectors, as defined by the UK Standard Industrial Classification of Economic Activities (SIC): 

• Accommodation and food services (SIC I)
• Administrative and support services (SIC N)
• Arts, entertainment, and recreation (SIC R)
• Construction (SIC F)
• Education (SIC P)
• Finance and insurance (SIC K)
• Health care and social work (SIC Q)
• Information and communication (SIC J)
• Manufacturing (SIC C)
• Professional services (SIC M)
• Real estate (SIC L)
• Transport and storage (SIC H)
• Wholesale and retail trades (SIC G)

Note: UK SIC sections A (agriculture, forestry, fishing), B (Mining and quarrying), D (Utilities), E (Water and waste management), O (public administration, defence, social security), S (other services), T (household employers), and U (extraterritorial organisations) are not currently included in the Index.

How are the data insights calculated?

The Intuit QuickBooks Small Business Index creates aggregated data outputs from a sample of 557,00 anonymized QuickBooks Online small business payroll customer records which are calibrated using statistical methods to create modeled results which better reflect the general population of small businesses in each country, as represented by published official statistics. Statistical adjustment ensures the Index truly reflects employment, job vacancy, and revenue changes rather than trends in the QuickBooks customer base. 

Rounded values

For clarity, total and monthly changes in employment, job vacancy, and average revenue levels have been rounded to the nearest hundred. Monthly changes and growth rates are calculated before total revenue, employment, or job vacancy values are rounded. Growth rates are rounded to the nearest hundredth.

Seasonal adjustments

The Index is seasonally adjusted to limit the effect of seasonal patterns in revenue, employment, or hiring throughout the year, which lead to regular fluctuations in income or workforce growth and contraction.

Time series

In the US:

• Employment Index is available from January 2015 to the present.
• Revenue Index is available from May 2019 to the present.

In Canada:

• Employment Index is available from January 2015 to the present. 

In the UK:

• Employment Index is available from January 2019 to the present.
• Job Vacancy Index is available from January 2018 to the present. 

Sample sizes

For the Revenue Index, the total US sample is 300,000 small businesses with 1 to 9 employees that use QuickBooks Payroll and QuickBooks Online.

For the Employment Index, the total sample across all three countries is 557,000 small businesses with 1 to 9 or 1 to 19 employees. The US sample is 444,000 small businesses with 1 to 9 employees. The Canadian sample is 87,000 small businesses with 1 to 19 employees. The UK sample is 26,000 small businesses with 1 to 9 employees. The minimum sample sizes for regions or sectors to be included in the Index are 1,000 small businesses in the US, 800 small businesses in Canada, and 200 small businesses in the UK.

Target populations

As noted above, in the US and UK, the Index reflects the population of small businesses with 1 to 9 employees, while in Canada it reflects small businesses with 1 to 19 employees. The differences in target populations ensure the data insights are consistent with official statistics available for benchmarking or reweighting during the calibration process. Data insights for these target populations are particularly valuable since most datasets fail to cover this portion of the economy well. 

External data sources

External data sources used alongside anonymized QuickBooks customer data include:

• U.S. Bureau of Labor Statistics Business Employment Dynamics (BED), Job Openings and Labor Turnover Survey (JOLTS), and Statistics of US Businesses (SUSB) revenue series 
• U.S. Bureau of Economic Analysis regions of the US
• Federal Reserve Bank of St. Louis Consumer Price Index for All Urban Consumers
• Statistics Canada Labour Force Survey and regions of Canada
• UK Office of National Statistics Business Population Estimates and Vacancy Survey

Employment growth formula

The employment index uses the “DHS” growth rate formula (Davis, Haltiwanger and Schuh, 1996) used in official statistics.

Employment growth(t) = [Employment(t)-Employment(t-1)]/[0.5*Employment(t)+0.5*Employment(t-1)]

Employment levels

The Index produces a monthly prediction of employment growth rates by country, region, and sector. In order to translate these growth rates into the number of jobs/vacancies gained or lost, the growth rates are multiplied by the prior month’s predicted employment levels, except during the months when official statistics are published. During those months, the latest official employment levels that have been reported are used in the calculation instead of the Index’s prior month’s predicted employment levels. As a result, the Index’s predicted total employment levels may at times differ from the predicted growth rates. Official statistics are published at different frequencies depending on the country ranging from monthly to quarterly.

Revenue growth formula

The revenue index uses the “DHS” growth rate formula (Davis, Haltiwanger and Schuh, 1996) used in official statistics.

Growth rate = net change ÷ 2 month average

Revenue levels

Real revenue levels are calculated by deflating revenue numbers to 2017 dollar values using the Consumer Price Index for All Urban Consumers (CPIAUSL) as follows:

Real revenue = revenue ÷ (CPIAUSL ÷ 100)

Definitions 

Revenue: Income from sales of goods and services. 

Real revenue: Revenue, in dollars, that has been adjusted for inflation. All dollar values shown in the Revenue Index have been adjusted (deflated) to 2017 dollars to remove the impact of inflation and show real increases in revenue over time.

DHS growth rate: “DHS” stands for “Davis, Haltiwanger and Schuh” who are the authors of the formula commonly used by economists to measure employment growth rates. The Index uses the DHS formula to calculate growth rates.

Firms versus establishments: The administrative data for each anonymized QuickBooks Online Payroll account corresponds to the firm and may also correspond to business establishments (physical locations where business is conducted). However, because the Index is primarily focused on small businesses with 1-9 (in the US and UK) or 1-19 (in Canada) employees, the difference between establishments and firms is minimized. 

Firm size: The size of a firm is determined by the average of the number of employees across two consecutive months.

Employee count: Anonymized administrative data from a sample of QuickBooks Online Payroll customer accounts provides counts on the number of employees, furloughed employees, and paychecks issued in a given pay period. Employees include wage earners with no hours in the pay period, workers on unpaid leave, and furloughed workers. The Index focuses on active and working employees but excludes furloughed workers as well as bonus payments and adjustments.

Updates to the Small Business Index methodology

The methodology behind the Intuit QuickBooks Small Business Index is updated whenever new metrics or calculations are added to provide more clarity or new insights into the small business economies of the US, Canada, and the UK. 

New US revenue index launched September 2024

In September 2024, the Small Business Index was expanded in the US to include revenue as well as employment. The new revenue index tracks monthly income to small businesses with 1 to 9 employees from the sale of goods and services, using data provided by a sample of QuickBooks Payroll customers who use QuickBooks Online to manage their business finances. The QuickBooks customer data is reweighted by state, sector, and year using official statistics. It is also anchored against revenue data in the U.S. Census Bureau’s Statistics of U.S. Businesses (SUSB) to ensure the revenue index mirrors the US population of small businesses rather than Intuit’s customers. Like the employment index, the revenue index is available at the national, regional, sector, and state levels. To adjust for inflation and ensure the index shows real revenue trends, income is shown in 2017 dollar values using the formula below:

Real revenue = revenue ÷ (Consumer Price Index for All Urban Consumers ÷ 100)

Technical details on the new US revenue index can be found here in the September 2024 Methodology Addendum.

New UK employment index launched June 2024

In June 2024, the Small Business Index was expanded to track monthly employment in the UK as well as job vacancies. Previously, due to limitations in the UK’s official statistics, the Index tracked monthly job vacancies in the UK but employment (jobs) in the US and Canada. The update was made possible by an upgrade to the UK methodology (Akcigit et al, 2023) which overcame the limitations in the UK’s official statistics by applying a reweighting methodology to the UK jobs data instead of the usual benchmarking approach that’s applied to other Index data. As noted above, official statistics are an important component of the Index because they make it representative of the small business economy as a whole (not Intuit’s business or customers).

Technical details on the new UK employment index can be found here in the June 2024 Methodology Addendum.

2024 update to employment levels calculations for regions and sectors

In April 2024, the Index methodology was updated to clarify the monthly jobs number estimates (also known as "employment levels") for regions and sectors in the US, Canada, and the UK. As a result of the update, from April 2024 onwards, the sums of jobs number estimates for regions/sectors are equivalent to the national total before rounding. After rounding for clarity, small discrepancies may remain but this is intentional. Previously, there were larger discrepancies in the sums which have been resolved by reweighting the growth rate estimates for regions and sectors to align with the national total. Please note that this update has not been applied retrospectively to any data published before April 2024.

Technical details on the reweighting update can be found here in the April 2024 Methodology Addendum.

Download full methodology

For citations: Akcigit, U., Chhina, R., Miranda, J., Ocakverdi, E., & Serrano-Velarde, N. (2023, May 1). Intuit QuickBooks Small Business Index: A New Employment Series for the US, Canada, and the UK. Retrieved from https://quickbooks.intuit.com/r/small-business-data/index/methodology/ 

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