The standard definition of a small business is the firm having less than 500 employees. This definition is given by the Small Business Administration’s Office of Advocacy. This definition is often used by the standard politicians. According to the SBA in 2010, 99.7 percent of approximately 6 million businesses with employees are small businesses. About 80 percent of the small businesses had less than 10 employees.
According to the Bureau of Labor Statistics data, there was a loss of 84 percent of jobs in small businesses having employees up to 499. The statistics data also showed that 61.8 percent of the net job losses occurred in the businesses having less than 50 employees in the fourth quarter of 2009. These data that differ from the size of small businesses, was given by different politicians. Hence, it is important to understand the term called small in small businesses.
The definition given by the Office of Advocacy might not be standard sometimes for official use. It is varied based on the industry for qualification for federal programs. The description can be clear from an example of small business provisions in the new healthcare law. Small businesses with less than 25 employees having average yearly wages below $50,000 are offered with subsidies. However, the penalties for health coverage are not offered by the employers having less than 50 employees. So based on the industry, the term small in small businesses has various meanings.