Small and medium-sized businesses: criteria, classification

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

The economy of any state is based on entrepreneurial activity. The right to engage in any business is spelled out in the constitutions of almost all countries of the world. Of course, we are talking about a legal (not prohibited) case. In any area (with the exception of mining and large engineering industries), we say that small and medium-sized businesses are at the head of the entire “pyramid”.

Market economy and small business

So, what is considered entrepreneurial activity in principle? And how to understand whether a company belongs to a large or medium-sized business? Or maybe your company is a small business?

According to the official definition, entrepreneurial is any independent activity that is carried out with the understanding and acceptance of allpossible risks. A prerequisite is the systematic profit. Small and medium business entities are the most active part of the market. Will you sell or offer something for rent, provide services, produce or grow - it does not matter. The main thing is to find a customer need that is not sufficiently satisfied, and offer the consumer options in the form of your products or services.

Governments benefit from a large number of small businesses. In addition to the jobs created, it is also regular tax payments to the budget. The Russian Federation is certainly no exception.

State custody

Support received by small and medium-sized businesses is carried out in the following areas:

• preferential use of resources: finance, logistics and information;
• licensing technical developments and patenting innovations;
• simplification of the procedure for registration of small enterprises;
• promoting foreign economic activity carried out by small and medium-sized businesses, including not only the development of trade relations, but also high-tech and scientific contacts with foreign countries;
• support for educational institutions engaged in retraining and advanced training of personnel of small firms;
• development and implementation of not only municipal, but also nationwide financial support programs.

Small business and public procurement

One of the areas of support is the recommendation (and from a certain point, the requirement) to include small and medium-sized businesses in public procurement (223-FZ regulates not only the timing of mandatory purchases from small firms, but also the quality and quantity of prisoners transactions). In addition, the law provides for the possibility for the government of the Russian Federation to prioritize the purchase of Russian-made goods (services, innovations) over foreign ones. This is how small businesses are supposed to be promoted.

The constant expansion of the infrastructure of private business development programs suggests that small and medium-sized businesses (the concept, classification are described below) are supported by the state.

Concept

Classification of companies is necessary not only for statistics. This allows you to determine the areas of state assistance, identify groups of enterprises that can receive preferential taxation, etc.

So, what is it - small and medium-sized businesses? The criteria defined in the Russian Federation primarily consider two indicators: the number of employees and the degree of state participation in the authorized capital. This is followed by the residual value of assets and authorized capital, as well as the annual turnover.

FirstLet us clarify that any firm can be classified as a small (medium) business if the state part of the authorized capital does not exceed 25%. An important caveat is the clarification that state participation includes both religious and public organizations, charitable and other foundations, as well as foreign citizens and legal entities. Another significant point is the requirement that the share of one legal entity in the authorized capital of a small (medium) scale company also does not exceed 25%.

Small and medium-sized businesses (the criteria for determining which we are currently interested in) should not have more than 250 people in the reporting period. But here, too, we are talking about the fact that the company will receive the status of an average company with a staff of 101-250 people; and small - if the number of employed employees does not exceed 100. For small enterprises, a deeper classification is provided, which we will talk about a little later.

The next factor in selecting a medium or small enterprise is the annual turnover. In the reporting year, the proceeds from the sale of its products, excluding value added tax, should not exceed the amount established by the government of the Russian Federation. This figure is determined every five years on the basis of continuous statistical observation. Annual turnover limits are set by industry and firm category.

What counts as a small business in various industries

Depending on the field of activity, small and medium-sized businesses may have suchnumber of full-time (as well as contracted) employees:

• 100 people for transport, industrial and construction companies;
• 60 people for science and technology and agriculture;
• 30 people for retail and consumer services;
• 50 people for wholesale firms.

The last criterion (50 people) applies to all industries and activities not listed.

Individual entrepreneurs

In addition, according to the Federal Law of the Russian Federation dated July 24, 2007 No. 209-FZ "On the development of small and medium-sized businesses in the Russian Federation", small and medium-sized businesses are all "private traders". That is, individuals engaged in business without registering a legal entity.

Thus, we get a fairly broad category of companies that can be defined as small and medium-sized businesses. The concept of “types” applies only to small firms: here such a group as “micro-small” enterprise is distinguished. Regardless of the field of activity, the total number of employees of such a company should not exceed 15 people.

Taxation

The most frequently asked question is how small and medium businesses pay taxes. The classification of companies makes it possible to identify firms that can enjoy preferential taxation on a permanent basis. Today Simplifiedthe tax payment, accounting and reporting system applies only to individual entrepreneurs (individuals who do business without opening a legal entity) and micro-enterprises (organizations with no more than 15 employees). The type of activity and turnover in this case do not play a role.

However, it should be borne in mind that a company will be recognized by the authorities as small only if the amount of revenue (sales of goods, provision of services, production of works) does not exceed 1000 times the minimum wage for four quarters (including reporting).

In addition to facilitating taxation, the state also seeks to develop small businesses by issuing loans on favorable terms, offering equipment rental on the basis of leasing agreements, etc.

Define the category of enterprise

As already noted, the state is based on three factors that determine whether a company belongs to one category or another: the number of employees, the value of assets, and revenue for the reporting period.

However, situations are quite possible in which a small enterprise, in terms of the number of employees, provides services (sells products) for an amount exceeding the established limit value. In such cases, the category is determined by the higher of the headcount and revenue factors.

How from a small business to a medium one

Belonging to one or another enterprise group changes only in thatif the indicators of the firm's limit values for two consecutive calendar years are less (greater) than those established by the government of the Russian Federation. Subjects of small and medium-sized businesses of the Republic of Kazakhstan and the Russian Federation are automatically transferred to another category. The management of the company does not need to write any applications or fill out documents.

Keep in mind that changing the category may lead to the abolition (or, conversely, the receipt) of certain tax benefits and revision of credit conditions. To do this, the tax service sends a notification to the company's management, which determines the new status of the company.

New ventures

Firms registered during the year can be called small if in the first year of operation, the number of employees and the book value of assets do not exceed the established limit values. This applies not only to individual entrepreneurs, but also to farms and manufacturing companies.

Since enterprises are registered during the year, these figures are calculated only for the period that has passed since the date of registration of the company.