Table of contents
Table of contents
The size of a business is usually defined based on its turnover and employee headcount. It’s one of those facts that probably isn’t useful until you suddenly really need it. For example, because you’re applying for a grant and you’re not too sure if you’re eligible or not. In this article we look at some of the terminology you might encounter when trying to describe the size of a business.
The term startup gets thrown around a lot in business. It’s often used colloquially to describe trendy tech fims, but it generally refers to a business which has been operating for around two years or less. They can be any size, but most businesses do tend to start out small and build up. Some funding groups might class a startup differently, so it’s always worth reading the small print to see if you’re eligible!
It’s generally accepted that they are very small scale operations. Someone dressed in pyjamas, running things from the dining table? Micro business. Companies House define a micro business as one which can tick at least two of these points:
Satisfying at least two of the above means a limited company can submit simpler accounts to Companies House, but what works for one organisation might not in another. Always check the criteria.
SME stands for small and medium-sized enterprises. The official definition of an SME describes a business which has fewer than 250 employees and a turnover below £44 million. It can all get a bit murky if you’re applying for tax relief though, with Companies House and HMRC sometimes using different thresholds so again, always read the fine print. Yes, we know it’s annoying.
So an SME has a definition, but Companies House use slightly different criteria when they’re talking about ‘small companies’ submitting accounts. In their guidance a small company has 50 employees or fewer, less than £7.5 million on its balance sheet, and a UK turnover of £15 million or less.
With the definitions being slightly fluid depending on context, it’s always wise to look further into the fine details. It could open up avenues of funding or networks that hadn’t previously seemed available, and might help to protect your interests from other organisations.
And of course! As your business grows, you could find yourself moving through definitions. This is great in most respects, but just keep an eye on how this might impact your responsibilities to existing agreements or investors. We’ll just mention checking the fine print or definition again because it’s very important. Does my business look big in this?
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A content writer specialising in business, finance, software, and beyond. I'm a wordsmith with a penchant for puns and making complex subjects accessible.
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