Question

Define a small business. What is the proper approach to define a small business (based on sales, profit, number of employees or characteristics)? Why do think the proper definition of a small business is important?

Answer 1

Small businesses are privately owned corporations, partnerships, or sole proprietorships that have fewer employees, less annual revenue than a regular-sized business or corporation. Businesses are defined as "small" in terms of being able to apply for government support and qualify for preferential tax policy varies depending on the country and industry.

We can see that many small businesses are sole proprietor operations consisting solely of the owner, but small businesses can have a small number of employees.

The legal definition of "small business" varies by country and by industry. In addition to number of employees, methods used to classify small companies include annual sales (turnover), value of assets and net profit (balance sheet), alone or as a combination of factors.

Many small businesses can be started at a low cost and on a part-time basis, while a person continues a regular job with an employer or provides care for family members in the home.

The proper definition of a small business is important because, in the natural sciences the process of taxonomy is valuable as it helps to identify, name and classify organisms allowing for better measurement in future research.