What is a Small Business?


You may be surprised by what qualifies as a small business. It’s not just your mom-and-pop corner market.

Small Businesses can be any legal form including sole proprietorship, partnership, and corporation. Small businesses have the following characteristics:

  • Independently owned and operated
  • Organized for profit
  • Place of business is located in the U.S.
  • Primarily operates within the U.S. or makes significant contribution to the U.S. economy through paying taxes or the use of American products, materials, or labor.

The size of a small business is defined either by average number of employees over the past 12 months or average receipt of sales over the past three years depending on the industry. According to The U.S. Small Business Administration some businesses can have up to 500, 1000, and even 1,500 employees or even bring in 33 million dollars in annual receipts and still be considered a small business!

The size standard for a small business differs by industry. For example most building construction businesses can make up to $33.5million dollars in annual receipts. Most specialty contractors, such as roofers, can make up to $14million dollars in annual receipts. Most farmers, such as orange groves, apple orchards, strawberry farmers, and tree nut farmers can make up to $750,000 in annual receipts. Check out the latest Table of Small Business Standards to see where your industry falls.

Why is it important to know your industry’s size standard? Eligibility for SBA’s programs such as financial assistance,  Federal government procurement, and Contracting are determined by the size standards.  However, in order to qualify for most programs aimed at helping small businesses, your small business needs to be properly structured, properly governed and, in many cases, properly licensed.

As you can see, small business can mean big money.  If you haven’t already done so, check with the SBA in your area to find out what benefits are available to your business. Then, sit down with a qualified attorney and accountant to ensure your business is structured and run the right way so you can qualify for the benefits available.


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