This seems like it should be a simple question to answer, but as with all things having to do with tax codes and accounting in general, the job of classifying the size of a business is more complicated than you’d think. Among the myriad variables one has to account for when qualifying the “small” in small business are the industry, number of employees, and revenue, and all these variables don’t add up to a single answer that applies to every situation.To give you an idea of how complex this system of categorization is, you can peruse the Small Business Administration’s Table of Small Business Size Standards Matched to North American Industry Classification System Codes, or the S.B.A.T.S.B.S.S.M.N.A.I.C.S.C. for short. When even the title of a document sets your head spinning, you know you’re in for a heavy read!
At Bryant & Associates, P.C. in Lincoln, Nebraska, our team of CPAs and accounting professionals specialize in small business accounting services, and we can help you navigate any issues you may have regarding tax services, payroll, and more. Read on as we investigate what exactly makes a small business a small business!
Making Sense of the S.B.A.T.S.B.S…Oh, You Get the Idea
This 46-page document outlines and sets limits for a range of variables by industry that define how big a small business can be and still be qualified as a small business in federal programs. As you might imagine at this point, the document’s system of categorization is complex and comprehensive. For example, there are 16 subcategories for the Plastics and Rubber Products Manufacturing industry, all with individualized rules and governances. A company manufacturing plastic bags and pouches can have up to 500 employees and still be considered small, while a tire manufacturer can have 1,000 (except if the business deals mainly in tire retreading, in which case the cap is 500 employees).
While this document is comprehensive, it can end up creating more questions than answers. Since every industry and sub-industry is dealt with separately (with mostly what seem to be arbitrary caps on either revenue or employees), there’s no clear answer as to what makes a business small. A bowling alley, say, can only make up to $7 million annually to be considered small, while a movie theater can make $35.5 million (with the exception of drive-ins, which are also capped at $7 million).
Contact Bryant & Associates Today at (402) 423-0404!
With so much riding on the classification of your business, it’s very important to have a clear idea of where you stand. With the help of Bryant & Associates, P.C., you can do just that. Our team of CPAs and small business accounting professionals provide a wide variety of services, from bookkeeping to tax services to payroll, that can keep your business running smoothly while you focus on the big picture. Give us a call today at (402) 423-0404 and let us help you navigate the tricky rules and regulations of federal and state tax law.