You may think you’re running a small business. However, the U.S. government may not agree. There are specific criteria businesses must meet in order to be officially classified as “small,” and this criteria varies based on the type of business. For example, a resume writing service that does under $7million in revenue is considered “small” as is a VoIP provider with under 1500 employees, but an advertising agency must do under $14million in revenue to be considered “small.”
Why does it matter? Because there are a number of government benefits available to “small” businesses that are not available to larger companies, such as SBA loan programs and special government contract opportunities.
So how do you determine whether your small business is a “small” business? The SBA (Small Business Administration) has created a handy Size Standards Tool that will figure it out for you.
The size determination is based on industry, so the first thing you need to do is enter your six digit NAICS (North American Industry Classification System) code. If you don’t know it, there is a link to the NAICS site within the tool, or you can look it up here. Use the search box to enter descriptive terms for your business, and the NAICS search will return codes with definitions that contain your terms. If there isn’t an exact match, choose the one that is closest to your business. (Note: Be sure to use the 2007 list, as the SBA tool is based on that one. It is the second search box.)
Once you have your NAICS code, simply enter it in the SBA tool. It will then determine whether the “small” criteria for your business is based on average annual revenue, or on employee count. The following question will ask you to enter one or the other. Then click the “continue to next step” button to get your result. “Yes” means you qualify and “No” means you don’t. The tool also tells you what the cut-off is for your particular industry.