What is a Small Business?

I am a small business. I have no employees. I write from my computer in a small bedroom that I have turned into an office. I make a modest sum with this small business.

But the question of "What is a small business?" has many answers because the government is involved. The U.S. Small Business Administration (SBA) is charged with providing the answers to that question in order to make available a variety of programs and other assistance.

In order to determine if your business meets the definition of a small business for the SBA, you must first decide what you do in that business. The SBA uses an international list of industries, the North American Industry Classification System (NAICS), as a starting point. You will need to find the code that best describes what your business does. I would spend some time looking because your first choice may not be the best. Give yourself some options by doing further research.

I looked for "writing" and got 16 answers, 13 of which involved the manufacture or sale of products. One was for a resume writing service, one for a letter writing service and another for a writing club. I am a writer but I am obviously not in the writing industry.

I searched authors, and look: "711510 Authors , independent". The category title is "Independent Artists, Writers, and Performers". The description covers freelance journalists and freelance writers. I am 711510.

Once you have the NAICS code, you can look up the size standard for that industry. Some standards show the maximum employees, some show maximum gross sales and some show both. 711510 says that I am a small business if I make under $7 million yearly. No worries there.

If you farm potatoes, you are a small business if you gross under $750,000 a year. If you run a cattle feed lot, you can make up to $2.5 million. Logging businesses must have under 500 employees to be a small business. A small business that manufacturers cookies cannot have more than 750 employees. New car dealers hit their limit at 200 employees. A newspaper is a small business with under 500 employees. The local sit down restaurant is cutoff at $7 million but the Chinese buffet place can be a small business up to $25.5 million.

The Census Bureau provides some interesting data on the size of companies from 2004. Out of 25.4 million firms, 19.5 million have no payroll, and most are self employed. Of those with a payroll, 98% employ under 100 employees and 99.7% employ under 500 employees.

Are you a small business? If you are, like me, then the resources of the SBA and similar state and local agencies are at your disposal.

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