patrick.net

This is a matter of much debate. Usually when people say "small businesses," they are talking about things that you and I wouldn't consider small businesses. Most small businesses don't make a lot of money, and Obama's tax plan would not affect very many of them at all.

There is also another definition of small business that in some cases includes companies that have up to 500 employees and some that have more, depending on what sector of the economy. I forget if this definition comes from the small business administration or somewhere else.

There is one type of small business that gets hosed sometimes, but not in the way that the politicians tell you. These small businesses are C corporations, so they have to pay corporate tax, and therefore find it can be hard to reinvest in the business. The Obama administration did try to help some amount of reinvestment through some tax loopholes, but when you hear anti-tax politicians talking about small businesses, they are certainly not looking out for these types of businesses.

You can start 10 small businesses within the next 24hrs if you wish. Most small businesses are not profitable on a consistent basis. The last I read, some 3 out of 4 small businesses fail in the first two years!

However, it is the survivors that create real jobs that last more than two years. It is the much smaller set (in business entity count not employee head count) of small businesses that are large enough and profitable enough to hire people outside the owners family that are the real job creators. Why? Because unlike large corporations, they are especially dynamic and nimble at discovering new opportunities and directing workers and resources towards such new opportunities.

By contrast, larger corporations are replicators and "scalers" that take (or buy off) a good idea from successful a small business, and then run with it.

What is SBA's definition of a small business concern?

SBA defines a small business concern as one that is independently owned and operated, is organized for profit, and is not dominant in its field. Depending on the industry, size standard eligibility is based on the average number of employees for the preceding twelve months or on sales volume averaged over a three-year period. Examples of SBA general size standards include the following:

* Manufacturing: Maximum number of employees may range from 500 to 1500, depending on the type of product manufactured;
* Wholesaling: Maximum number of employees may range from 100 to 500 depending on the particular product being provided;
* Services: Annual receipts may not exceed $2.5 to $21.5 million, depending on the particular service being provided;
* Retailing: Annual receipts may not exceed $5.0 to $21.0 million, depending on the particular product being provided;
* General and Heavy Construction: General construction annual receipts may not exceed $13.5 to $17 million, depending on the type of construction;
* Special Trade Construction: Annual receipts may not exceed $7 million; and
* Agriculture: Annual receipts may not exceed $0.5 to $9.0 million, depending on the agricultural product.

-from: http://www.sba.gov/content/what-sbas-definition-small-business-concern

leoj707 says

SBA defines a small business concern as one that is independently owned and operated, is organized for profit, and is not dominant in its field. Depending on the industry, size standard eligibility is based on the average number of employees for the preceding twelve months or on sales volume averaged over a three-year period. Examples of SBA general size standards include the following:

Thanks, this is good info.

Reality says

You can start 10 small businesses within the next 24hrs if you wish. Most small businesses are not profitable on a consistent basis. The last I read, some 3 out of 4 small businesses fail in the first two years!

However, it is the survivors that create real jobs that last more than two years. It is the much smaller set (in business entity count not employee head count) of small businesses that are large enough and profitable enough to hire people outside the owners family that are the real job creators. Why? Because unlike large corporations, they are especially dynamic and nimble at discovering new opportunities and directing workers and resources towards such new opportunities.

By contrast, larger corporations are replicators and "scalers" that take (or buy off) a good idea from successful a small business, and then run with it.

I agree with you that being a small business owner is very risky and a huge percentage of them fail in the first 6 months. However, I think that from asocietal standpoint, it is more beneficial to have more jobs generated in the corporate and government sector as they have economies of scale to pay people better and hence result in greater overall financial security. On opposite side, as an example, Mexico has a very high entrepreneurship rate - close to 25% and they aren't doing too well despite this statistic. They are clearly a society of haves and have nots and the haves are small business owners.