Question

A small business:

a) must have fewer than 100 employees to be considered small.
b) is considered small relative to other businesses in its industry.
c) cannot be a C or S corporation.
d) should not have more than three locations in a region.

Answer 1

The answer is b) is considered small relative to other businesses in its industry.

Step-by-step explanation:

The classification of a business as "small" often depends on its size relative to others in the same industry. This can involve factors such as the number of employees, annual revenue, or other industry-specific criteria.

Answer 2

A small business may have fewer than 100 employees but that is not a strict requirement; it is defined relative to its industry and can be a corporation. There are no strict rules about the number of locations it can have.

Step-by-step explanation:

The definition of a small business can vary depending on context and source, but commonly it refers to a firm with a smaller number of employees relative to other firms in the industry. Contrary to some misconceptions, a small business:

• Does not necessarily have to have fewer than 100 employees, though many do fit this criteria.
• Is considered small relative to other businesses in its industry, accounting for the diversity of what constitutes a small business across different sectors.
• Can be a C or S corporation; there are no restrictions on the corporate structure that small businesses can adopt as long as they meet other criteria typically used to define small businesses, such as revenue, assets, or number of employees.
• There is no strict rule on the number of locations a small business can have, though typically they have a limited regional presence.

In the United States, the Small Business Administration provides specific size standards that vary across industries, often considering factors like annual receipts and the number of employees. It is a common misconception that small businesses cannot be incorporated or must have extremely limited operations. In reality, small businesses extend across a multitude of forms and sizes, from sole proprietorships to small corporations.