Small businesses are vital to the American economy, but regulatory compliance can be a heavy burden for small employers. Two laws, the Regulatory Flexibility Act (RFA) and the Small Business Regulatory Enforcement Fairness Act (SBREFA), provide protection and relief for small employers that must comply with the U.S. Environmental Protection Agency (EPA), the Occupational Safety and Health Administration (OSHA), and a slew of other federal rules.
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You may be familiar with the most basic definition of a “small business”—a for-profit enterprise with fewer than 500 employees—but did you know that the definition is actually much broader than that? And did you know that you might be eligible not only for the federal procurement and loan programs available to small businesses but also for input into federal agency regulatory processes, enforcement relief, and access to equal justice under the RFA and the SBREFA? Here’s a look at the expanded definition of “small business” that could make your business eligible for these benefits.
Size, Receipts, and Industry Sector
Even if you don’t fall within the basic employment-based definition of “small business,” you might still be one. The Small Business Act authorizes the U.S. Small Business Administration (SBA) to define small business, and it does so not only by size but also by average annual receipts and industry category. SBA definitions of small businesses apply to a firm’s parent company and all affiliates as a single entity.
Based on your North American Industry Classification System (NAICS) code and annual receipts, you may be a small business without even realizing it. For example, the SBA size standards table indicates “small” paper mills that produce newspaper are identified by NAICS code 322122 and are defined by those with 750 or fewer employees; potato farming is identified by NAICS code 111211 and is defined by annual receipts of $750,000 or less. It’s worth checking, which you can do at SBA’s size standards page.
Government Entities
Small government entities also qualify for regulatory protections under the RFA. The RFA defines “small governmental jurisdiction” as the government of a city, county, town, school district, or special district with a population of less than 50,000. Rural governments in sparsely populated areas or governments with limited revenues may also apply to be included through RFA’s “alternative definition” process. However, states and tribal governments are not considered small governments under the RFA.
Small Organization
Nonprofit organizations may also be defined as small for purposes of SBA-administered programs. The RFA defines “small organization” as any “not-for-profit enterprise which is independently owned and operated and is not dominant in its field.”
Employers that meet one of these definitions of “small” are eligible for regulatory compliance assistance and other programs and protections that can substantially. reduce their compliance burden. In future articles, we’ll look at just what those programs can do for small employers of all types.