Small business is an economic sector that includes a wide range of organizations from solo entrepreneurs and family-run shops to growing companies with hundreds of employees. They drive innovation, create jobs, and play an essential role in the economy of local communities. The Center helps to inform policymakers, scholars, and the public about these important enterprises through research and data collection.
In many cases, a business is considered small by the federal government because it falls below certain revenue and employee size thresholds set by the Small Business Administration (SBA). State and local government entities also use different criteria to define small businesses. For example, Oregon statutes and administrative rules establish varying size standards that depend on a company’s industry and firm revenue.
The challenges that small business face include a high rate of inflation, which causes higher prices for goods and services that can be difficult to pass along to customers. Another challenge is finding new clients and customers. Using marketing tools to promote and advertise is one way to increase sales, but many small businesses find themselves lacking the time and resources needed to effectively market their products or services.
Lastly, a small business owner needs to know how to structure their organization for legal and tax purposes. The simplest type of small business is a sole proprietorship, which can have only one owner and does not require filing a separate tax return. If two or more people want to share the responsibility and profits of a small business, they can form a partnership. Another option is to incorporate a small business, which provides limited liability protection for owners and allows them to take advantage of a broad list of tax deductions.