Small business is a key driver of economic growth and job creation. It is also a significant source of innovation and can help solve societal issues like bridging the digital divide. Small businesses are the backbone of the US economy, making up 99 percent of all American companies and employing more than 46 million private-sector employees. But despite their size, they can face unique challenges and have limited resources. That’s why we’ve put together this guide to support the growth of America’s entrepreneurs. From essential definitions to expert advice, here’s what you need to know about small business.
The term “small business” is a broad one that can be defined differently depending on your industry, revenue, and number of employees. To qualify as a small business under the federal government’s standards, businesses must have fewer than 500 employees and less than $5 million in revenue (although these numbers vary by industry). State and local governments may also have their own definitions. In Oregon, for example, a small business is defined by the number of employees and average annual sales.
Beyond these standards, however, small businesses can take many different legal forms, including sole proprietorships, partnerships, and corporations. When choosing the right structure for your business, consider the tax implications and other legal responsibilities. Regardless of the form you choose, a solid business plan is critical for planning your company’s future and gaining funding. You should also start researching your potential customers and competitors to understand your market.
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