Small businesses constitute 99.9% of all businesses in the United States according to statistics from Small Business Administration.

Are you operating a small business? How do you determine if your business is one?

Often when we refer to small businesses there is the general focus on the small mom and pop business, a doctor’s office, a mechanic’s shop, an accountant, an independent contractor, a bakery, or that favorite local family restaurant down the road somewhere. While these examples are all accurate, in the United States for a business to be considered a small business classified by the Small Business Administration (SBA), it must meet the following requirements:

1. The business must be located in and operated mainly in the United States.
2. It may be structured in any legal form such as a sole proprietorship, partnership, limited liability company, corporation, or any other.
3. It must be set up for profit.
4. The business must contribute significantly to the United States economy by employing American labor, using American products or materials, or paying taxes.
5. It must be owned and operated independently and not be a market leader in its sector.

Businesses that meet the above requirement must also meet the size and revenue criteria.

The Small Business Administration uses these two clearly defined federal standards in their classification of small businesses. Although small businesses are often described as businesses that have zero to 500 employees or businesses making less than 1 million dollars in annual revenues, the classification is broader. In fact, the maximum number of employees for a small business could be lower or as high as 1,000 or even 1,500 depending on the industry. The same applies to the classification by revenues, they can be higher than $1 million.

For the sake of illustrations, a sample of the small businesses classified by annual revenue and the size of employees is listed here in the breakdown.

Businesses categorized by the size of their annual revenue are:

• NAIC 522110 - Commercial Banking

• NAIC 522120 - Savings Institutions

• NAIC 522130 - Credit Unions

• NAIC 511210 - Software Publishers

• NAIC 448140 - Family Clothing Stores

• NAIC 523920 - Portfolio Management

• NAIC 236117 - New Housing For-Sale Builders

• NAIC 236220 - Commercial and Institutional Building Construction

• NAIC 237120 - Oil and Gas Pipeline and Related Structures Construction

$35 Million or Less in Revenue

• NAIC 441222 - Boat Dealers

• NAIC 512110 - Motion Picture and Video Production

• NAIC 721110 - Hotels and Motels

$30 Million or Less in Revenue

• NAIC 446120 - Cosmetics, Beauty Supplies and Perfume Stores

• NAIC 486210 - Pipeline Transportation of Natural Gas

• NAIC 712110 - Museums

• NAIC 541512 - Computer Systems Design Services

$22 Million or Less in Revenue

• NAIC 541213 - Tax Preparation Services

• NAIC 561611 - Investigation Services

• NAIC 453910 - Pet and Pet Supplies Stores

$16.5 Million or Less in Revenue

• NAIC 541810 - Advertising Agencies

• NAIC 441310 - Automotive Parts and Accessories Stores

• NAIC 713910 - Golf Courses and Country Clubs

• NAIC 238150 - Glass and Glazing Contractors

$12 Million or Less in Revenue

• NAIC 451140 - Musical Instrument and Supplies Stores

• NAIC 623312 - Assisted Living Facilities for the Elderly

• NAIC 711410 - Agents and Managers for Artists, Athletes, Entertainers and Other Public Figures

$8 Million or Less in Revenue

• NAIC 621210 - Offices of Dentists

• NAIC 522310 - Mortgage and Nonmortgage Loan Brokers

• NAIC 531311 - Residential Property Managers

• NAIC 722511 - Full-Service Restaurants

$1 Million or Less in Revenue

• NAIC 111332 - Grape Vineyards

• NAIC 112340 - Poultry Hatcheries

• NAIC 112920 - Horse and Other Equine Production

Businesses categorized by the size of their employees are:

1,500 Maximum Number of Employees

• NAIC 336412 - Aircraft Engine and Engine Parts Manufacturing

• NAIC 326211 - Tire Manufacturing (except Retreading)

• NAIC 324110 - Petroleum Refineries

• NAIC 325992 - Photographic Film, Paper, Plate, and Chemical Manufacturing

• NAIC 336111 - Automobile Manufacturing

1,250 Maximum Number of Employees

• NAIC 311351 - Chocolate and Confectionery Manufacturing from Cacao Beans

• NAIC 311412 - Frozen Specialty Food Manufacturing

• NAIC 312111 - Soft Drink Manufacturing

• NAIC 312120 - Breweries

• NAIC 327213 - Glass Container Manufacturing

• NAIC 333132 - Oil and Gas Field Machinery and Equipment Manufacturing

• NAIC 325412 - Pharmaceutical Preparation Manufacturing

1,000 Maximum Number of Employees

• NAIC 221122 - Electric Power Distribution

• NAIC 221210 - Natural Gas Distribution

• NAIC 311230 - Breakfast Cereal Manufacturing

• NAIC 312130 - Wineries

• NAIC 311421 - Fruit and Vegetable Canning

• NAIC 312112 - Bottled Water Manufacturing

• NAIC 325110 - Petrochemical Manufacturing

• NAIC 337910 - Mattress Manufacturing

• NAIC 541713 - Research and Technology in Nanotechnology

• NAIC 511130 - Book Publishers

750 Maximum Number of Employees

• NAIC 221113 - Nuclear Electric Power Generation

• NAIC 339114 - Dental Equipment and Supplies Manufacturing

• NAIC 311920 - Coffee and Tea Manufacturing

• NAIC 483211 - Inland Water Freight Transportation

500 Maximum Number of Employees

• NAIC 332813 - Electroplating, Plating, Polishing, Anodizing and Coloring

• NAIC 339116 - Dental Laboratories

• NAIC 339910 - Jewelry and Silverware Manufacturing

• NAIC 339930 - Doll, Toy, and Game Manufacturing

250 Maximum Number of Employees

• NAIC 221114 - Solar Electric Power Generation

• NAIC 221115 - Wind Electric Power Generation

• NAIC 423430 - Computer and Computer Peripheral Equipment and Software Merchant Wholesalers

• NAIC 424410 - General Line Grocery Merchant Wholesalers

150 Maximum Number of Employees

• NAIC 423730 - Warm Air Heating and Air-Conditioning Equipment and Supplies Merchant Wholesalers

• NAIC 424120 - Stationery and Office Supplies Merchant Wholesalers

• NAIC 424130 - Industrial and Personal Service Paper Merchant Wholesalers

• NAIC 424320 - Men's and Boys' Clothing and Furnishings Merchant Wholesalers

100 Maximum Number of Employees

• NAIC 423910 - Sporting and Recreational Goods and Supplies Merchant Wholesalers

• NAIC 423940 - Jewelry, Watch, Precious Stone, and Precious Metal Merchant Wholesalers

• NAIC 424330 - Women's, Children's, and Infants' Clothing and Accessories Merchant Wholesalers

• NAIC 424480 - Fresh Fruit and Vegetable Merchant Wholesalers

• NAIC 424930 - Flower, Nursery Stock, and Florists' Supplies Merchant Wholesalers

This is by no means an exhaustive list of small businesses. To find out whether your business qualifies as a small business, refer to a more comprehensive list of the small business size regulations in the Electronic Code of Federal Regulations (eCFR).

Small businesses vary in size and industry and although they have their own unique set of risks and challenges, they face the same social, economic, environmental, legal, and geopolitical risks that larger businesses face.

When you are buying insurance, insurance companies have their own set of guidelines on what size of small business they will and can insure. What an insurance company can insure is often dictated by the insurance company's risk appetite, capacity, and modeling, among other factors. Underwriters may have additional questions about your business operation and risk exposures. If you are unsure of how to proceed with your insurance procurement or have questions, give us a call.

At Axios Risk Solutions, LLC., we help small and medium-sized enterprises, families and individuals minimize and manage their business risks through tailored risk management strategies and protect their business and assets through a variety of insurance solutions available in the market. To request a quote or speak to a broker, contact us.

Our experienced professionals have years of experience working with big corporations as well as small businesses and are ready to assist you.

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Author: Sandra Owusu-Fianko

Sandra Owusu-Fianko, is the Principal and Risk Advisor at Axios Risk Solutions, LLC. She has an extensive experience in the insurance industry and is passionate about finding appropriate risk management and insurance solutions for her clients.