The following briefly outlines what it means to be a small business and common terms used to describe them.

  1. A small business may be defined as a business with a small number of employees.
  2. 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.
  3. These businesses are normally privately owned corporations, partnerships, or sole proprietorships.
  4. Small businesses are common in many countries, depending on the economic system in operation.
  5. Typical examples include: small shops, hairdressers, tradesmen, solicitors, lawyers, accountants, restaurants, guest houses, photographers, small-scale manufacturing etc.
  6. 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.
  7. 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".
  8. When judged by the number of employees, the American and the European definitions are the same: under 10 employees.
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