So, What Exactly Is a Small Business?

Is it a silly question to ask. If Kristy asked me who our target audience is, I say someone that is running their own small business. The term is used everywhere— in government policy, in media headlines, and in the conversations we have with other business owners. But have you ever stopped to ask: what actually makes a business “small”?

Depending on who you ask, the definition changes — sometimes a little, sometimes a lot. But understanding which version applies to you can make a real difference when it comes to tax concessions, legal obligations, and opportunities for growth.

Let’s unpack what “small business” really means in Australia — and why it matters.

The Official Definitions (and Why They’re Confusing)

If you ask the Australian Tax Office (ATO), a small business is one with turnover under $10 million. That definition unlocks access to a range of tax concessions, simplified reporting, and deductions.

But ask the Fair Work Act, and you’ll get something different: fewer than 15 employees.

Meanwhile, the Australian Bureau of Statistics calls anything with fewer than 20 staff a small business.

Banks, insurers, and grant programs? They all have their own versions too.

So, which one is right?

All of them — depending on the context.

And that’s the point: the definition that applies to you depends on what you’re doing. Tax rules, HR rules, and government programs each use their own lens. Knowing which one matters to your situation helps you stay compliant and take advantage of what’s available.

The Real-World Definition: You Just Know

Numbers aside, most small business owners don’t need a government chart to tell them they’re running a small business.

• You feel it.

• You wear ten hats before breakfast.

• You personally know your customers.

• Your “IT department” is probably your teenage kid.

• And your biggest challenge isn’t finding work — it’s finding time.

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Whether you’re a tradie with a ute and an apprentice, a café owner with a tight-knit team, or an accountant with ten staff — the experience of running a small business has the same heartbeat: personal responsibility, constant juggling, and total commitment.

The Engine Room of Australia’s Economy

Small businesses aren’t just the backbone of the Australian economy — they are the economy.

97% of all Australian businesses are small businesses.

They employ around 5 million Australians.

They generate roughly one-third of our GDP.

That’s a staggering contribution from people who often work longer hours, take more personal risk, and reinvest everything back into their communities.

Yet despite their importance, most small businesses operate on razor-thin margins and limited time. That’s why clarity, structure, and smart systems make all the difference.

The Mindset Shift: “Small” Doesn’t Mean “Limited”

The word “small” can sometimes hold business owners back.

We hear it and think I’m not big enough to…

But the truth is, small business owners have superpowers that big corporations dream about — agility, speed, and personal connection. You can pivot faster, serve better, and build deeper loyalty than most larger companies can even imagine.

The challenge — and the opportunity — is learning to think like a big business operator while staying true to your small business roots. That means:

• Building repeatable systems and processes.

• Embracing technology that saves time and money.

• Focusing on scalable growth — not just working harder.

So, What Is a Small Business?

It depends on who you ask — but here’s our take:

A small business is one where the owner still knows every part of how it works, where relationships matter more than titles, and where growth comes from grit, not guesswork.

Being “small” isn’t about size. It’s about ownership, connection, and the freedom to build something that’s truly yours.

Takeaway

If you’re running a small business, take the time to figure out which definition applies to you for tax, HR, and compliance purposes.

Then, shift your mindset: being small is an advantage — if you use it right.

Because being small doesn’t mean thinking small.

It just means you’re close enough to your business to make every decision count.