What Is a Small-to-Medium Business, Anyhow?

There are a wide variety of definitions of Small-to-Medium Businesses (SMBs), depending on whom you ask.

The US Small Business Administration (SBA) is the federal government's specialized agency for dealing with small businesses. And they have at least seven different categories of what defines a small business! We're not kidding: you can check for yourself.

The IRS has its own confusing set of definitions that just add to the mess. Plus, every couple of years, Congress passes some kind of law that contains a new definition of "small business" for its particular purpose.

Simple SMB Definition from SimpleVerity

We try to keep it simple. A Small-to-Medium Business (SMB) is any business with less than 100 employees.

There's an easy way to remember where the breakpoint of 100 employees is. Business #100,000, as ranked by employee size, has about 100 employees.

So, of the 6 million businesses that have employees, 100,000 of them have over 100 employees, and 5,900,000 have fewer. Those 5.9 million are SMBs.

Why Is There Such Confusion?

It's very politically useful to say you help "small business." So if you're a politician wanting to pass a law, or institute a government benefit program, or give a tax break -- you often want to attach the term "small business" to it.

It sounds cynical to say it, but there it is. If you have over 100 employees, you're just not small. (Maybe "midsize.") Only a politician could think otherwise.


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