What Is a Small Business?


A business does not need to be large in order to qualify for the small business category, although it must still pay taxes to the government. According to the Small Business Administration, size standards range from two to five million employees, and the amount of annual receipts is considered. The size standard is different for each industry, so it is important to understand what your business is actually doing and what size you should aim for. You can find more information about how to qualify for the small business category here.

A small business may be non-dominant, or it may be a minority-owned enterprise. The Small Business Act defines a small business as one that has fewer than 50 employees. Businesses can also be affiliates in order to be eligible for federal contracts. As long as the affiliate does not own more than fifty percent of the parent company, they will not fall under the category. However, the stakes in the parent company are high enough that they can influence the other company’s decisions and policies.

To be considered a minority-owned small business, a company must be 51 percent owned by members of a minority group, and be run by minority-owned employees. The owner must also be a minority and control the company. For a woman-owned business, the owner must be a woman and manage the business. The ownership percentage should be at least twenty-five percent. The federal government requires that at least half of the business be operated by a woman.

A business must be 51 percent owned by a minority or a woman to be eligible for this category. A company must also be managed and controlled by a minority or woman. If a minority-owned small business is not a majority-owned company, it can still qualify. A woman-owned small business can be a nonprofit that provides counseling services for women and minorities. This type of small business has the potential to create jobs, but it will be a challenge.

Another common misconception about the small business category is whether it is a sole proprietorship or a partnership. Depending on the size of the business, a sole proprietorship is a business where the owner has full control of the company. The owner of a corporation has no control over the company, but she has a stake in it. The owner of a woman-owned business has full authority over its management, and has the right to control the company.

A small disadvantaged business must be owned and managed by a person who is socially and economically disadvantaged. The owner’s net worth must be less than $750,000. Such a business may be owned by a Black, Hispanic, or Asian-Pacific American. There is no limit to the number of owners. Only one person can own and manage the business. In some cases, it is not possible to own a franchised business.