It is important for small business owners to understand that business size affects your operations. Government agencies have different procedures for different types of businesses, how then can they consider your business as a Small Business?
Eventually, maybe your goal is to become a large Corporation, however not all small businesses want to or will grow to that size. You will ideally operate at a smaller scale for years, serving the local community and generate enough profit to take care of the business owners and a handful of employees. Small Businesses have a distinct characteristic that will set them apart from bigger corporations.
Meaning of Small Business
Small businesses can either be service or retail based like stores (medical, grocery, and clothing). They can also be trades people (tradies). Some examples are bakeries and small manufacturing shops. Small businesses are usually independently owned that require fewer employees and lower capital. They also need less or no machinery at all. They are usually designed to serve the local community.
Characteristics of a Small Scale Business
Low Income and Profit Margin
Although they target a lower income, it doesn’t really directly translate to a lower profit. Well-established small businesses often already own their own facilities and equipment and have other factors that can lower their operational cost and long-term costs. They can leverage these to their advantage.
Fewer Employees
Smaller means smaller team of employees, smallest ones are even run by a single individual. Some that are still considered small businesses employ at least 100 employees but will depend on the registered business type.
Smaller Market Area
We often mention here in this article that usually small businesses are designed to serve a small community, township or city. The very definition being that small businesses are prevented from serving more than the area assigned on their registration, growing outside these limitations requires businesses to scale up including their registered classification.
Sole Proprietorship or Partnership Taxes
As a non-corporate business cannot run a small-scale operation, small businesses are the ones appropriate to handle such business operations; organized as sole proprietorship, partnership or LLC (Limited Liability Company). Corporations often use third-party services of smaller-businesses to minimize costs between them.
It is always best to identify the type of business you have to be able to avail Government Tax breaks, benefits and support. Small Businesses are being guided by the government to become small enterprises and later on supported to become corporations to be able to scale up and help the local economy.