The Government Definition of "Small Business"
While the definition of a “small" business might seem relative, the precise meaning is important when it comes to applying for grants, tax considerations, contracts and small business loans. The Small Business Administration uses standards established by the North American Industry Classification System.
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SBA Definition
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The U.S. Small Business Administration has established a small business as one that operates for profit in the United States and contributes to the national economy by paying taxes and uses American products or labor. It can take any of a variety of legal forms including partnership, corporation or sole proprietorship.
Size by Revenue: Farm
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For most farm-related companies, the standard limit is set at $750,000. Forestry and logging is set at $7 million, while fishing, hunting and trapping is set at $4 million.
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Size by Revenue: Arts, Entertainment and Recreation
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The standard small business revenue limit for most arts, entertainment and recreation businesses is $7 million. This includes restaurants, accommodations, amusement parks and museums.
Size by Revenue: Retail
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The annual revenue limit for most retailers is $7 million, but there are numerous exceptions. Car dealers and groceries can bring in more than $20 million and still be considered a small business.
Size by Employee Number
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Most manufacturing companies are allowed to have about 500 employees, but that can range up to 1,000 depending on the type. A typical wholesale business can usually have about 100 employees.
Government certification
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Companies may register with the federal government as small businesses to compete for government-related contracts. Woman-, veteran- and minority-owned businesses, however, may self-identify in the Central Contractor Registration database.
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References
- Photo Credit business image by Christopher Hall from Fotolia.com
