Small Business in Ohio - Most Businesses in Ohio are Classified as "Small Business"
Small business is anything but small. In Ohio, over 95% of all businesses are small businesses. (See 2016 U.S. Small Business Administration Profile on Ohio here
). Between 45% and 48% of all private sector employees are employed by small businesses in Ohio. (See the Ohio Small Business Profile
). Generally, being classified as a small business matters for things such as qualification for government contracts, tax purposes, and the number of employees and revenue has an impact on the application of certain employment laws to the business. The definition of what counts as a "small business" is different depending on the industry. The biggest industries for small business in Ohio, by rank are:
- Health Care and Social Assistance;
- Accommodation and Food Service;
- Other Services (except public administration);
- Professional, Scientific, and Technical Services;
- Wholesale Trade
- Administrative, Support, and Waste Management;
- Finance and Insurance.
(See the Ohio Small Business Profile
). Each industry has their own requirement, in terms of average annual revenue and number of employees for being able to be classified as a "small business." Some of the requirements may surprise you, because small business is not so small. For example, for Health Care and Social Assistance businesses, a physicians group will count as a small business if the average annual receipts are under $11 million per year and $7.5 million per year for dentists and other health offices. Retail businesses count as "small businesses" if their average annual receipts are under $7.5 million (with some exceptions going over the $7.5 million threshold). Construction businesses count as small businesses, if for General Building and Heavy Consruction businesses their average annual receipts are under $36.5 million, for special Trade Contractors their annual receipts average under $15 million, and for Land Subdivision construction, their annual receipts are under $27.5 million on average. For Legal businesses, their annual receipts have to be under $11 million, $20.5 million for accounting firms, $7.5 million for architecture firms, and $15 million for engineering firms. It's no wonder that small businesses make up the vast majority of all businesses across Ohio and across the United States.
Income for Business Owners in Ohio
The limits for what counts as a "small business" is relatively high, which is why almost all businesses in Ohio are technically "small businesses." The 0.1% to 5% of businesses in Ohio that are too large to be classified as "small businesses" employ over 50% of the private sector workforce, so although those businesses make up a very small part of the total number of businesses in Ohio, they make up a very large part of employing Ohioans. Most small businesses in Ohio have just a single owner. Beyond that, a large percentage only have between 1 and 3 owners. Owners of incorporated
businesses tend to make more money than owners of unincorporated entities. For example, in 2015, the median income for individuals self-employed at an incorporated business was $46,149.00. Individuals who were self-employed at an unincorporated entity (a sole proprietorship or partnership) made a median income of $21,821.00 per year. (See more here
). Having your business incorporated does not necessarily lead to higher profits, but generally, as your business makes more money, then it makes a lot more sense to incorporate the business. As your business grows, the business also needs to grow its network of professional help.
Help for Small Business Owners
While there are a number of programs with the SBA and tax incentives and other programs in Ohio for small business owners, all business owner really needs outside professional advice that they can trust. The law firm of Harris & Engler has been advising small business owners across Ohio with regard to all kinds of issues that business owners face. Whether you need help with getting your business properly set up and preparing the corporate books and corporate structure, adding employees, adding new owners, facing regulatory issues, an attorney at Harris & Engler can offer helpful advice. You can talk to an attorney at Harris & Engler today by calling (614) 610-9988.