Frequently Asked Questions # 3

3. What is a small business?

According to the United States Small Business Administration, "Small Business" means:

• a business entity organized for profit
• with a place of business located in the United States
• which operates primarily within the United States or which makes a significant contribution to the United States economy through payment of taxes or use of American products, materials, or labor.

A small business size standard is a threshold measured either in number of employees or by average annual receipts, depending upon the industry. Each NAICS code has a small business size standard assigned to it. Businesses that meet or fall below the assigned size standard for a particular industry are considered to be a small business for that particular industry. The most common size standards to be considered "small" include:

• 500 employees for most manufacturing and mining industries
• 100 employees for all wholesale trade industries
• $5 million in average annual receipts for most retail and service industries
• $17 million in average annual receipts for most general and heavy construction industries
• $7 million in average annual receipts for all special trade contractors
• $.5 million in average annual receipts for most agricultural industries

For more information regarding the definition of a small business, visit the SBA's website.

Refer to: SBA Table of Size Standards