Is Your Enterprise a Small Business?

No business owner wants to pay more in taxes than absolutely necessary. Misidentifying an enterprise can have significant financial consequences and will impact many of the rules that must be followed. In the Sunshine State, and according to the IRS, any business with less than 500 employees is classified as a small business.

Knowing what category in which an endeavor falls is especially important now. Over 5 million new businesses were launched nationwide as a result of the pandemic, 700,000 of which were located in Florida. That doesn’t even take into account individuals that have entered the gig economy or are growing side hustles. Being counted as a small business can make the enterprise eligible for grants, low interest loans, and a variety of government programs. It can even affect the type of insurance an enterprise carries.

Eligibility is Complicated

Eligibility as a small business can be extremely confusing and may depend on annual revenues, the number of employees, or a particular industry. Eligibility will depend on the criteria set forth by a particular organization or institution. The SBA, for example, factors in overhead costs for some industries, but not others.

Annual Receipts

In some instances, eligibility is determined by annual revenues. It’s a mistake to assume that $1 million is the benchmark of a large enterprise. There are any number of seemingly small or family-owned companies that attain that mark each year and are still considered a small business.

Annual revenues of $16.5 million for a roofing contractor or $20 million in annual revenues for a dredging company both fall within the small business realm.

Employee Counts

When applying for loans, grants or programs, the number of people a business employs can be a determining factor. Some manufacturing companies can have 1,500 or more employees and be classified as small, while a mining company with 500 employees is considered large.

The Industry

As a general rule, $7 million in annual receipts and having 500 employes places a business in the “large” category. There are exceptions to that criteria that are dependent on the industry within which the company operates. Manufacturing plants in some industries can have 1,500 or more employees and be classified as small.

For more information about how The Sena Group can help you with any

of your insurance needs, please contact us at 561-391-4661.

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The Sena Group
6501 Congress Ave., Ste. 100
Boca Raton, FL 33487