In Australia, a small business is a privately owned corporation, a partnership or a sole proprietorship. The definition of a small business varies depending on the industry. Under the Australian Fair Work Act 2009, a small business is any enterprise employing less than 15 people while the European Union defines a small business as any enterprise employing less than 50 employees. The US Small Business Administration defines small businesses as any enterprise employing less than 500 individuals. There are other ways of classifying small businesses such as its assets, its sales or its net profits.

There are many small businesses in Australia. They include small shops such as delicatessen or bakery, tradesmen, hairdressers, accountants, lawyers, photographers, restaurants, guesthouses, online businesses wh ich include website design and programming and small scale manufacturing.

Major Characteristics of Small Businesses

Most small (owner managed) businesses are more like nominal organizational forms such as sole traders, partnerships or private corporations. The consequent accounting and legal boundaries of these businesses are systematically meaningful.

However, the owners of these businesses who are also the managers most of the time never delineate their behaviors to agree with implied separations existing between the business and their personal interests. Lenders may also contract around the corporate boundaries by accepting collateral or personal guarantors.

Due to this behavior, most analysts and researchers reject the relevance of the implied boundaries and organizational types in various contexts relating to the owner managed firms. These include various analyses that utilize the traditional accounting disclosures and the studies that view a firm as defined by formal organizational structures.

Small Businesses Entity Concessions

Small business Australia have access to several tax concessions. However, you must review your business every year to ascertain whether you are running a small business. The tax organization considers the businesses that have been in operation for all or part of a financial year and which have realized $2 million aggregate turnover.

Aggregate turnover is the annual turnover plus turnover from other businesses which are your affiliates or which are connected with you. To know whether you are a small business, consider the following:

• The previous year turnover

If your previous income year aggregate turnover was below $2 million, then you are running a small business.

• Estimate the turnover of the current year

If your estimate for the current year aggregate turnover is most likely to fall below $2 million, this year you will fall in the small business category. However, estimating the current year’s turnover is only possible if the average aggregate turnover in one of the last two years was below $2 million.

• The actual turnover in this year

If the first two methods fail to work for you, then you have to calculate the annual aggregate turnover for this year. And if the aggregate turnover falls below $2 million, then you will be a small business enterprise for this year.