Small business is a type of privately owned, for-profit enterprise that operates in the United States and produces goods or services. It may be operated in a variety of forms, such as sole proprietorships, partnerships, and corporations (C corps). Small businesses are often less bureaucratic than large firms and more flexible in decision-making and resource allocation. They also provide more employment opportunities and contribute to the local economy, accounting for 43.5 percent of the nation’s gross domestic product.
Despite this positive impact, running a small business isn’t for everyone. Small businesses are more likely to face financial challenges than larger enterprises and can experience greater losses if they fail. Owners also have to put more of their personal assets on the line, and may lose a portion of their income when they sell or close the company. However, if small businesses succeed, they can be lucrative and offer greater job satisfaction than employees at large corporations.
Many factors determine whether a business qualifies as small, and the criteria vary by industry. For example, some companies in the building construction or agriculture industries need to have fewer than 1,500 employees to qualify for small-business status. Other criteria include North American Industry Classification System (NAICS) codes, which are six-digit classifications similar to UPC codes, and the Small Business Administration’s table of size standards, which establishes the maximum revenue or employee count at which a firm can still qualify for federal small-business program benefits.
About the Author
