Why Does Size Matter (In A Business)?
Running a business comes with plenty of challenges and opportunities, and knowing where your business fits in the broader landscape can make a big difference.
In Australia, businesses are categorised by size to help shape the support, tax rules, and growth opportunities available to them.
You’re not alone if you’ve ever wondered about the difference between micro and small businesses.
While they share some similarities, their distinctions are worth noting.
Micro Businesses: Small but Mighty
Microbusinesses represent around 25% of all businesses in Australia – a significant slice of our economy. These are typically the smallest operations and:
- Employ between one and four people, including the owner.
- Often operate as sole traders, family-run ventures, or partnerships.
- Fall under the broader definition of small businesses but typically have simpler structures and lower turnovers.
Examples include freelancers, home-based businesses, and local service providers. Their streamlined operations make them agile, but they often benefit from targeted support and guidance to scale effectively. In many cases, micro-businesses may be registered as self-employed sole traders.
Small Businesses: The Next Step Up
Small businesses are slightly larger and play a critical role in Australia’s economy. They:
- Employ fewer than 15 people.
- Have an annual revenue turnover (excluding GST) of less than $2 million.
- Include a mix of sole traders, partnerships, trusts, and companies.
Examples range from boutique retailers to small manufacturing operations. These businesses often face more complex management and regulatory requirements but also have greater growth potential.
Why Knowing the Difference Matters
Understanding your classification ensures you take advantage of appropriate tax concessions, government grants, and support programs. Both micro and small businesses can qualify for Small Business Entity concessions, but their needs and strategies differ.
No matter your business size, knowing where you stand helps you make informed decisions.
For tailored advice to help your business thrive, reaching out to an experienced accountant can make all the difference.
IMPORTANT NOTICE
This blog post contains general information only and has been prepared by Allworths without reference to your objectives, financial situation or needs. Allworths cannot guarantee the accuracy, completeness or timeliness of the information contained here. By making this information available to you, we are not providing professional advice or recommendations. Before acting on any of the information contained here, you should seek professional advice.
