What Is a Small Business?


Small is a term used to describe businesses that are relatively small in size. This includes sole traders and partnerships with fewer than a certain number of employees. In some cases, a business can be considered “small” even if it’s not classified as a sole trader or partnership, but there are a few other criteria to look for when considering your company’s size.

Small Businesses Definition

A small business is a private, for-profit entity that employs fewer than 1,500 people and earns less than $38.5 million annually. These figures are based on size standards set by the SBA, which vary by industry. Some industries allow companies to have up to 1,500 employees and $38.5 million in annual revenue, while others have an employee limit of 100 and a sales limit of $750,000.

The SBA uses the North American Industry Classification System (NAICS) to determine a small business’s size. Each industry is assigned a six-digit NAICS code and broken into sub-industries with different sizes and revenue requirements.

Services-Based Ideas

If you have skills that are in high demand, then offering your services can be a lucrative option for a small business. Examples include writers, graphic designers, virtual assistants, SEO practitioners, cleaning service providers, dog walkers, real estate professionals and more.

Niche Business Opportunities

Selecting a business niche can be one of the most important decisions you make when starting a small business. You’ll need to decide what you want to focus on, what your market needs, and how much money you’re willing to invest.

Ultimately, selecting a small business idea is a personal decision, and it should be something you’re passionate about. You’ll need to be able to work on it regularly and find the motivation to keep going.

A small business can provide a lot of benefits, from financial rewards to freedom and unlimited growth. However, it can also come with its own set of risks.

Some of the most common risks associated with running a small business are stress, time commitment and financial uncertainty. If you’re considering this path, it’s important to research the pros and cons of small business ownership.

Choosing a Small Business Structure

When starting a small business, it’s important to choose the right legal structure for your business. A legal structure can make it easier to receive financing, file tax returns and apply for government contracts.

The Small Business Administration recommends a limited liability corporation, or LLC, as the best business structure for most small businesses. It’s especially helpful if you plan to grow your business in the future.

Creating a Small Business Bank Account

Opening a business bank account is another great way to ensure your business’s finances are separate from your personal ones. This will help you gain an accurate picture of your cash flow and financial health, as well as make bookkeeping and tax preparation easier.

The Small Business Administration offers a variety of resources to help small businesses thrive. These can include SBA loans, business loans and financing, and entrepreneurial programs to support your business’s growth.

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