Small businesses constitute 99.9% of all businesses in the United States according to statistics from Small Business Administration.
Are you operating a small business? How do you determine if your business is one?

Often when we refer to small businesses there is the general focus on the small mom and pop business, a doctor’s office, a mechanic’s shop, an accountant, an independent contractor, a bakery, or that favorite local family restaurant down the road somewhere.
While these are all accurate examples, in the United States for a business to be considered a small business classified by the Small Business Administration (SBA), it must meet the following requirements:
The business must be located in and operated mainly in the United States.
It may be structured in any legal form such as a sole proprietorship, partnership, limited liability company, corporation, or any other.
It must be set up for profit.
The business must contribute significantly to the United States economy by employing American labor, using American products or materials, or paying taxes.
It must be owned and operated independently and not be a market leader in its sector.
Businesses that meet the above requirement must also meet the size and revenue criteria.
The Small Business Administration uses these two clearly defined federal standards in their classification of small businesses. Although small businesses are often described as businesses that have zero to 500 employees or businesses making less than 1 million dollars in annual revenues, the classification is broader. In fact, the maximum number of employees for a small business could be lower or as high as 1,000 or even 1,500 depending on the industry. The same applies to the classification by revenues, they can be higher than $1 million.
For the sake of illustrations, a sample of the small businesses classified by annual revenue and the size of employees is listed here in the breakdown.
Businesses categorized by the size of their annual revenue are:
$600 Million or Less in Assets
• NAIC 522110 - Commercial Banking
• NAIC 522120 - Savings Institutions
• NAIC 522130 - Credit Unions
$41.5 Million or Less in Revenue
$39.5 Million or Less in Revenue
$35 Million or Less in Revenue
$30 Million or Less in Revenue
$22 Million or Less in Revenue
$16.5 Million or Less in Revenue
$12 Million or Less in Revenue
$8 Million or Less in Revenue
$1 Million or Less in Revenue
Businesses categorized by the size of their employees are:
1,500 Maximum Number of Employees
• NAIC 336412 - Aircraft Engine and Engine Parts Manufacturing
• NAIC 326211 - Tire Manufacturing (except Retreading)
• NAIC 324110 - Petroleum Refineries
• NAIC 325992 - Photographic Film, Paper, Plate, and Chemical Manufacturing
• NAIC 336111 - Automobile Manufacturing
1,250 Maximum Number of Employees
1,000 Maximum Number of Employees
750 Maximum Number of Employees
500 Maximum Number of Employees
250 Maximum Number of Employees
150 Maximum Number of Employees
100 Maximum Number of Employees
This is by no means an exhaustive list of small businesses. To find out whether your business qualifies as a small business, refer to a more comprehensive list of the small business size regulations in the Electronic Code of Federal Regulations (eCFR).
Small businesses vary in size and by industry and although they have their own unique set of risks and challenges, they face the same social, economic, environmental, legal, and geopolitical risks that larger businesses face.
Small Business Insurance
We have access to a number of insurance companies who have a broad selection insurance solutions suited for small business enterprises.
When you apply for insurance, the insurance companies have their own set of guidelines on what size of small business they will and can insure. What an insurance company can insure is often dictated by the company's risk appetite, capacity, and modeling, among other factors. Underwriters may have additional questions about your business operation and risk exposures. If you are unsure of how to proceed with your insurance procurement or have questions, give us a call.
Our experienced professionals have years of experience working with large corporations as well as small businesses and are ready to assist you.
At Axios Risk Solutions, LLC., we help small and medium-sized enterprises, families and individuals minimize and manage their business risks through tailored risk management strategies and protect their business and assets through a variety of insurance solutions available in the market. To request a quote or speak to a broker, contact us.
Author: Sandra Owusu-Fianko
Sandra Owusu-Fianko, is the Principal and Risk Advisor at Axios Risk Solutions, LLC. She has extensive experience in the insurance industry and is passionate about finding appropriate risk management and insurance solutions for her clients.