Which of the following would not be considered a small business

Which of the following would not be considered a small business? 1. A woman who sells $52,000 worth of homemade face masks and hair bands on Etsy. 2. A farm that has four part-time employees and $600,000 annual sales to farmers’ markets. 3. A farm with 25 seasonal employees and $3 million annual sales to Whole Foods. 4. A downtown boutique with ten employees and $5 million annual sales. 5. A programmer who writes code for games at home on contract for $250,000 a year.

The correct answer and explanation is:

Correct Answer: 4. A downtown boutique with ten employees and $5 million annual sales.

Explanation:

A small business is generally defined by factors such as the number of employees, annual revenue, and industry standards. In the United States, the Small Business Administration (SBA) provides specific thresholds for what qualifies as a small business, and these vary depending on the industry.

In most industries, especially retail and service-based businesses, a company is considered a small business if it has fewer than 500 employees and annual revenue below certain limits, often between $1 million and $41.5 million, depending on the sector.

Let’s break down the five options:

1. The woman on Etsy earns $52,000 per year. This is clearly a small business due to both low revenue and self-employment.
2. The farm with $600,000 annual sales and four part-time workers is small. Agricultural businesses are typically considered small if they make under $2.5 million to $5 million, depending on the crop or product.
3. The farm with $3 million in sales and 25 seasonal employees is still considered a small business in agriculture, which often has higher revenue limits.
4. The downtown boutique with $5 million annual sales and ten employees might seem small based on staff size, but in the context of retail trade, this amount can exceed the SBA’s small business revenue threshold for certain retail industries. Many retail categories have a maximum cap between $2 million and $5 million, so this business is likely at or just over the line and may not qualify as a small business, especially in urban centers with higher economic standards.
5. The programmer earning $250,000 per year as an independent contractor is self-employed and earns far below small business thresholds. This is considered a small business.

Therefore, Option 4 is the best choice for a business not typically considered a small business, based on its high revenue relative to its sector.