Definition of a small business?

I looked at this once before when a similar question came up - found this link which gives a number of definitions. Hope it helps...

http://www.lib.strath.ac.uk/busweb/guides/smedefine.htm

I think its based on the turnover, being below £2m makes you a small business or maybe thats just what banks use.

A small company does not need an audit, medium onwards do!

I think its based on the turnover, being below £2m makes you a small business or maybe thats just what banks use.

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I was in the bank last week setting up business accounts for my wife and the start up guy wasn't around so they sent a higher guy and he seemed to suggest there was 3 levels 0-100k, 100k to 1mil then 1 mil + - he was a 1mil + guy but i'm pleased to say was extremely helpful and treated us just like his £mill clients

as far as I can recall, the Government's view of a small business is those with a gross turnover of £2.6m and under. The definition of a small business may well vary depending on the purpose you intend on using it for.

creospace said:

I was in the bank last week setting up business accounts for my wife and the start up guy wasn't around so they sent a higher guy and he seemed to suggest there was 3 levels 0-100k, 100k to 1mil then 1 mil + - he was a 1mil + guy but i'm pleased to say was extremely helpful and treated us just like his £mill clients

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That was only internal stucturing. In the banking world you don't want a million plus customer being upset by a junior manager, so only senior managers will deal with them. Also the needs of a 0-100K customer are vastly different (and less complex) than those of a million plus customer, so the training and experience needs to be higher.

bwglaw said:

as far as I can recall, the Government's view of a small business is those with a gross turnover of £2.6m and under. The definition of a small business may well vary depending on the purpose you intend on using it for.

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Thats the figure I remember (don't know from where).

As you say it depends on the business as a whole though. If I was to set up as a small estate agent on my own and landed a £30million house, the payment (at 10%) would be £3million (I wish) would that make me a large business?

According to the OPSI (Office of Public Sector Information) website, a small company, defined by the Companies Act 2006 is mainly the following:

The qualifying conditions are met by a company in a year in which it satisfies two or more of the following requirements- 1. Turnover Not more than £5.6 million 2. Balance sheet total Not more than £2.8 million 3. Number of employees Not more than 50
Medium Sized are as follows:
1. Turnover Not more than £22.8 million 2. Balance sheet total Not more than £11.4 million 3. Number of employees Not more than 250
I can't link on posts yet, but if you try the OPSI website and have a look at the Companies Act it is defined in there

think there should be a new level installed..Micro Businesses..those that are part timers, they make under 5,000 a year and are top-up wages. They can be done by the internet, selling car parts etc on a regular basis. No tax just Micro Business.

There are quite a few things which apply to small business with less than 5 employees - for example the requirements for certain fire safety things.

As with most things in life, all these thresholds need a huge amount of qualification and an idea of context before they can be assessed. There are different cut off points for various facets of VAT, for CT and for other regulatory concerns, but even here the danger is that they are far too generic to cover every business type.

There is a massive difference between the turnover of a low margin company and a high margin company with respect to their "size". For example a solicitors retains close to 100% of its revenue as "gross profit" whereas a currency trader may retain under 1% of revenues so may be turning over many millions to turn a small income. These extremes are quite clear cut, but when you look at retailing as a whole, there doesn't appear to be much distinction between different margin businesses which could range from 5% to 85%.

I guess the more common thresholds get round it by using the "any two of three" concept, but this does not mean that the attempt to generalise is remedied perfectly. Then again, unless there was case by case screening, which would be prohibitively expensive, this is probably the best fit.

Interesting that the fire safety threshold was mentioned earlier, since, as far as I remember, this one is definitely flawed. It seems to use the number 5 without reference to size or number of premises such that a company with five small shops and one member of staff in each must do five separate risk assesments, whereas one shop with four members of staff working in does not. Would surely be better administered on a staff per premises basis rather than per company.

Chatting with my accountant today about selling a business, he mentioned (for retail turnover) the magic number of £10,000 per week as the trigger point for a business that would be actively pursued for purchase by a bigger rival.