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How to Determine Your Company Size – User Fee Category

Follow these steps

1. Determine if you are a small business according to the Small Business Administration’s company size standards1 using this online tool.

a. You’ll need your North American Industry Classification (NAICs) code. You can only pick one and it must be the industry classification that generates the most revenue for your company.

i. If you don’t know your NAICs code, please visit the Introduction to the NAICS on the Census website. You can also contact your local U.S. Commercial Service office for assistance.

b. Depending on your NAICs code, you’ll also need to know either your average annual revenue/receipts over your most recently completed three fiscal or taxable years or your average number of employees over the past 12 months. Need more details on these calculations? See below.

2. After entering your information into the online tool, it will tell you if you qualify as a small business.

a. If you do, great!

b. If not, do you have less than $1 B in annual revenue? Follow the same revenue calculations as before. If so, you qualify as a medium-sized company.

c. If not, you qualify as a large company.

3. Certify your size on your company questionnaire for the U.S. Commercial Service.

Calculating your average annual receipts

Annual Receipts = Gross Income + Cost of Goods Sold

(The amount you would put on your 1120, 1065, or 1040 IRS form)

This includes:

  • Receipts for all affiliates of a business concern, regardless of what they do, where they are located, or how they are organized.

o Affiliation with another business concern is based on the power to control, whether exercised or not.

§ Power to control exists when a part or parties have 50 percent or more ownership

o It may also exist with considerable less than 50 percent ownership by contractual arrangement or when one or more parties own a large share compared to other parties

o Factors such as common ownership, common management, and identity of interest (often found in members of the same family), among others, are indicators of affiliation. See the SBA’s Small Business Compliance Guide Size and Affiliation for more details.

  • Subcontractor costs
  • Reimbursements for purchases a contractor makes at a customer’s request
  • Employee based costs such as payroll taxes

This does not include:

  • Net capital gains or losses
  • Taxes collected for and remitted to a taxing authority if included in gross or total income such as sales or other taxes collected from customers and excluding taxes levied on the concern or its employees
  • Proceeds from transactions between a concern and its domestic or foreign affiliates
  • Amounts collected for by a travel agent, real estate agent, advertising agent, conference management service provider, freight forwarder or customs broker

Averaging your Receipts

  • Add your most recent 3 completed fiscal years (taxable years, including short years) and divide by 3 to get your average annual receipts.
  • If you haven’t been in business for 3 complete fiscal years, add up the total receipts for the period the you have been in business divided by the number of weeks in business, multiplied by 52

o For example, if your business made $100,000 in 36 weeks, you’d calculate as follows:

§ $100,000 ÷ 36 = $2,777.78

§ $2,777.78 × 52 =$144,444.56

  • If you have been in business for 3 complete fiscal years, but have a short year as one year within those years, your annual receipts will be the total receipts for the short year and the two full fiscal years divided by the total number of weeks in the short year and the two full fiscal years, multiplied by 52.

o For example, in year one, your business made $250,000 in a complete fiscal year. In year two, you had a short year and made $150,000 in 40 weeks. In year three, you made $200,000 in a complete fiscal year.

o $250,000 + $150,000 + $200,000 = $600,000.

o $600,000 ÷ (52 + 40 + 52) = $4,166.67

o $4,166.67 × 52 = $216,666.67

Calculating your average number of employees

‘Employees’ includes:

  • All individuals employed on a full-time, part-time, or other basis. Part-time and temporary employees are counted the same as full-time employees.
  • Employees obtained from a temporary employee agency, professional employee organization or leasing concern
  • Employees of domestic and foreign affiliates (find more details on affiliates)

o Affiliation with another business concern is based on the power to control, whether exercised or not.

§ Power to control exists when a part or parties have 50 percent or more ownership

§ It may also exist with considerable less than 50 percent ownership by contractual arrangement or when one or more parties own a large share compared to other parties

o Factors such as common ownership, common management, and identity of interest (often found in members of the same family), among others, are indicators of affiliation. See here for more details: Find more details from SBA.

Volunteers should not be included in your calculation.

Calculate the average based upon numbers of employees for each of the pay periods for the preceding completed 12 calendar months. If you haven’t been in business for 12 months, the average is calculated for each of the pay periods during which it has been in business.

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