• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Facebook
  • Instagram
  • LinkedIn
  • Twitter
  • YouTube
Big Ideas for Small Business logo

Barbara Weltman

Big Ideas for Small Business, Inc.

Whitepaper download

Subscribe and download our eBook, "150+ Tax Deductions for Small Business A to Z."

This field is hidden when viewing the form
Get the:

  • Home
  • About Us
  • Big Ideas For Your Business
    • Idea Of The Day ®
    • SMB Legal
    • SMB Taxes
    • SMB Financial
    • Small Business
    • Newsletter Archive
  • Services
  • Books
  • Blog
  • Multimedia
    • Videos
    • Radio Shows/Podcasts
  • Be a Guest Blogger

What Is Small Business?

October 5, 2021 / By Barbara Weltman

What Is Small BusinessLast month included National Small Business Week. Politicians are continually claiming to help small businesses. My website is dedicated to educating small business owners. So what exactly is “small business”? There’s no easy answer.

Overview of the problem

There’s no single definition of “small business.” The answers vary by government departments and agencies as well as banking, insurance, and other private-sector industries. Definitions may be based on:

  • Number of employees
  • Amount of revenue (often gross receipts)
  • Amount of assets

Government definitions

Different departments and agencies use different definitions. The following is a sampling of some of the most common ones:

 SBA: revenue (ranging from $1 million to over $40 million) and by employment (from 100 to over 1,500 employees), depending on the industry. The U.S. Census Bureau aligns with this definition for purposes of its regularly conducted Economic Census.

IRS: In my book J.K. Lasser’s Small Business Taxes, I’ve identified nearly 3 dozen different definitions used in the Internal Revenue Code for federal tax purposes. The definitions use number of employees, gross receipts, and/or assets as the basis for being “small” and eligible for special breaks. This means you may be a small business for some tax rules but not for others.

ACA: number of full-time and full-time equivalent employees. Employers with 50 or more such employees are subject to the employer mandate. Small employers are exempt from the mandate and may buy coverage for employees through the federal government’s Small Business Health Options Program (SHOP). Some state SHOPs may be used by employers with up to 100 employees. But self-employed individuals, even though in business, can’t use the SHOP; they’re part of the individual health market.

DOL: the number of employees determines whether an employer is subject to various employment-related laws. Small employers are those exempt (i.e., do not have a sufficient number of employees to be subject to the laws), including:

  • Age Discrimination in Employment Act (ADEA), barring discrimination of workers age 40 and older: 20 employees
  • Americans with Disabilities Act (ADA), requiring employers to make reasonable accommodations for employees with a disability: 15 employees.
  • Family and Medical Leave Act (FMLA), requiring certain unpaid leave time (not COVID-19-related leave): 50 or more employees
  • Worker Adjustment and Retaining Notification (WARN) Act, requiring at least 60 days notice of plant closing or mass layoff: 100 more employees

Private sector definitions

Businesses use their own definitions. Here are some examples:

Health insurance. Group health insurance is separated into the small and large group market. The small group market generally applies to businesses with 50 or fewer full time-equivalent employees (i.e., employers not subject to the employer mandate under ACA). Premiums per employee generally run higher than those in the large group market.

But coordinating private group health insurance and Medicare for those who are still working to determine which is primary and which is secondary coverage has different rules. If the employer has 20 or more employees, the group health plan pays first. If there are 19 or fewer employees, Medicare is the primary coverage and group health is secondary.

Banking. Some banks and credit unions offer special banking services for small businesses, such as free checking. They may have a separate lending division to handle small business loans. There’s no fixed definition of small business for banking purposes. Each bank applies its own rules and may have different definitions for different purposes (e.g., accounts versus loans).

Final thought

The point of this blog is not to detail every definition of small business, which is impossible to do, but to demonstrate that there’s no easy way to know if you are considered one.

Bottom line: Look at every law and every opportunity individually to determine if you are a small business.

Tags definition of small business employment-related laws small business

Primary Sidebar

Categories

  • General Business (498)
  • Guest Blog (109)
  • Homepage (21)
  • Small Business (990)
  • SMB Financial (322)
  • SMB Legal (66)
  • SMB Taxes (324)

Barbara’s Recent Posts

  • Scale Your Business by Stepping Up IP Protection May 29, 2025
  • Disasters Happen: It’s Important to Be Prepared Now May 27, 2025
  • How Work Order Software Transforms Small Business Operations May 26, 2025
  • The Numbers Are Up for Sole Proprietorships May 22, 2025
  • New Business or Project Crowdfunding: What To Know May 20, 2025
  • Old-School Estimating vs. Smart Solutions: What’s Really Holding You Back? May 19, 2025
  • Employees Getting Called to Public Service: What to Know May 15, 2025
  • Not Too Late to Prep for Summer Now May 13, 2025
  • How Will the Next Generation of Learners Affect the Workplace May 12, 2025
  • Moms Know Best: Lessons for Entrepreneurs May 8, 2025
  • Mental Health Challenges in the Workplace May 6, 2025
  • Let’s Celebrate Small Business! May 1, 2025
Awarded Top 100 Small Business Blog medal (link will open in a new window or tab)
Marquis Who's Who 2023 Badge
Top Small Business Blogs (Link will open in a new window or tab.)
8 Financial blogs small business Owners Need to Read. Invoice home.  (link will open in a new window or tab)
Best Small Business Blog, Expertido.org
Top 50 Small Business Blogs 2018
Best Small Business Blogs
BizHumm Top 100 Business Blog Award to Barbara Weltman
FitsSmallBusiness.com: Award for Best Small Business Blog 2017 (link will open in a new window or tab)
FitsSmallBusiness.com: Award for Best Small Business Blog 2016 (link will open in a new window or tab)

Footer

Big Ideas for Small Business logo

Small business ideas, business tax news and small business consulting from Barbara Weltman to provide business owners with the information they need to succeed. Visit our small business blog, Idea of The Day®, small business books and articles on small business taxes, small business finance and small business legal advice.

Contact Us

[email protected]

(772) 492-9593

gacor maxwin situs slot thailand terpercaya situs slot gacor situs gacor akun pro thailand slot bandar togel terpercaya

Latest Tweets

bigideas4sb Big Ideas for Small Business® @bigideas4sb ·
May 27

Do I Have to Tell External Candidates I’m Considering Someone Internal? — Improve Your HR https://bit.ly/43dscoO #smallbusiness #hiring #workplace

Reply on Twitter 1927477539204710619 Retweet on Twitter 1927477539204710619 Like on Twitter 1927477539204710619 Twitter 1927477539204710619
bigideas4sb Big Ideas for Small Business® @bigideas4sb ·
May 27

A Good Time to Review Your Company’s Driving Policy - https://bit.ly/4lVXNUC #smallbusiness #drivingpolicy #driving

Reply on Twitter 1927462491241562410 Retweet on Twitter 1927462491241562410 Like on Twitter 1927462491241562410 Twitter 1927462491241562410
bigideas4sb Big Ideas for Small Business® @bigideas4sb ·
May 27

Mental Health Challenges in the Workplace - It’s been estimated that nearly 1 in 5 people in the U.S. have a mental health issue https://bit.ly/4jT70LG #workplace #wellness #smallbusiness #wellbeing

Reply on Twitter 1927426874210222315 Retweet on Twitter 1927426874210222315 1 Like on Twitter 1927426874210222315 1 Twitter 1927426874210222315
Load More

Copyright © 2008–2025 Big Ideas for Small Business, Inc  |  Designed by Hudson Fusion

  • Privacy Policy
  • Sitemap