The following briefly outlines what it means to be a small business and common terms used to describe them.
- A small business may be defined as a business with a small number of employees.
- The legal definition of "small" often varies by country and industry, but is generally under 100 employees in the United States while under 50 employees in the European Union.
- These businesses are normally privately owned corporations, partnerships, or sole proprietorships.
- Small businesses are common in many countries, depending on the economic system in operation.
- Typical examples include: small shops, hairdressers, tradesmen, solicitors, lawyers, accountants, restaurants, guest houses, photographers, small-scale manufacturing etc.
- The smallest businesses, often located in private homes, are called microbusinesses (term used by international organizations such as the World Bank and the International Finance Corporation) or SoHos.
- The term "mom and pop business" is a common colloquial expression for a single-family operated business without any hired labor, e.g., "mom and pop store".
- When judged by the number of employees, the American and the European definitions are the same: under 10 employees.