A small business is a privately-owned business which typically has fewer employees and/or less annual revenue in comparison with larger-sized businesses or corporations. This is generally understood to be 10-50 employees and an annual turnover of between £2 and £10 million.
Small businesses are often seen as a key component of the UK economy, representing a significant chunk of the overall labour force. This includes cafes, restaurants, high street shops, financial services, online sites, and trade services. Small businesses are often referred to as ‘independent’.
Micro businesses are often included within the category of small businesses. This is the term for businesses with under 10 employees and a turnover of less than £1.78. Another useful term is SME, which stands for Small and/or Medium Enterprise – this covers all businesses with up to 250 employees.
There are two main types of legal structure for a small business: sole trader or limited company. A sole trader is an individual who owns and runs the entire business and therefore legally liable, whereas a limited company is a separate legal entity.
Further reading:
- How to start a business in 20 days
- How do I choose a legal structure for my business?
- What taxes do small businesses pay?
