DEFINITION OF A SMALL BUSINESS IN CANADA OR LACK THEREOF-PART 1

ICS Blogger from ICS Business Advisory Ltd. Calgary.

You may be surprised to know that there is no standard definition of a small business in Canada.

 

Let us start with a dictionary definition. " A small business is  privately owned and operated with a small number of employees and relatively low volume of sales". That of course was of no help except that we would categorize a small business based on the number of employees and/or sales.

 

In the United States, a very comprehensive size standard has been developed for small businesses and differs from industry to industry. The size standards are either based on receipts (equivalent of sales) OR number of employees. In some cases they are based on the size of the balance sheet. Based on the 6 digit NAICS code, you can find the size standard for any small business in the US.  

 

In the EU, the definition for small business and SME's (Small & Medium sized enterprises) is also defined by regulation.Under recommendation 2003/361/EC SME's are classified into 3 categories and each category has a headcount (employees) AND Turnover OR Balance Sheet ceiling. The 3 categories are: Medium sized, Small  and Micro. For example, a small business has a headcount ceiling of 50 and a turnover ceiling of 10 million euros or a balance sheet ceiling of 10 million euros.

 

Now let us come to Canada. I do not know where to start. We have at least 4 authorities to study for a definition of small business in Canada. These are 1) Canadian Bankers Association, 2) Canada Revenue Agency, 3) Industry Canada (Federal Govt.) and 4) Statistics Canada (Federal Govt.). I will take up all of these authorities in Part 2 of my blog. But be prepared to get more confused!

 

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