Micro Business Definition and Meaning Part I

It doesn’t matter whether you are starting a large business or a small business. First and foremost, it is important that you manage it successfully. For this reason, even the smallest companies enjoy a high reputation in Germany . After all, they represent the majority within the corporate forms in our country. But what actually is a micro-enterprise?

What is a micro business?

According to POLYHOBBIES, a micro-enterprise company is a company with fewer than ten employees. They also differ from other types of company in terms of their annual turnover . Small businesses have an annual balance sheet total or annual turnover that does not exceed two million euros. The term “micro-enterprise” was also introduced because a distinction was made within the EU from small and medium-sized enterprises, so that the micro-enterprises can also benefit from suitable funding opportunities.

What does SME mean?

You have probably heard of the term SME many times . But what is hidden behind this term. SME is the acronym for Small and Medium Enterprise. However, there are some delimitations within these types of companies. Around 15 years ago, the EU stipulated that an SME could not employ more than 250 people. However, there are further delimitations with regard to the number of employees and also with regard to sales revenues and total assets.

Corporate form Delimitation features
Micro business The small business employs fewer than 10 people . As microentrepreneurs your turnover or your is annual balance sheet total at the most, two million euros.
Small businesses As a small business owner, you have fewer than 50 employees . Per year your annual turnover or is your annual balance sheet total does not exceed a maximum of 10 million euros.
Medium business As an owner of a medium-sized company, you have fewer than 250 employees . Your medium-sized company has an annual turnover of a maximum of 50 million euros or an annual balance sheet total of a maximum of 43 million euros.

Here we have again summarized all the criteria at a glance:

Differences to other legal forms

You can now see how the size class between companies is differentiated within the EU based on the above-mentioned delimitations. However, it happens again and again that many people equate the micro-enterprise with a small business or a small business . But this is a big mistake, because there are some differences here too.

So let’s take a closer look at the individual forms mentioned:

Shape Hints
Small business A small business is a company that applies to the tax office for the small business regulation . This regulation is stipulated in the UStG under § 19.If you want to apply for this small business regulation, you must meet the following requirements:

  • Your turnover, including sales tax, must not have been more than 17,500 euros in the previous financial year .
  • In the current fiscal year, your sales will your estimated non- 50,000 are euros.

You can apply this small business regulation to all legal forms.

Micro business As a small business owner, you are not to be equated with the small business owner. The criteria for differentiation such as employees and sales are already described above. But you also have the option of applying for the small business regulation as a small business owner.
Small businesses In no case should you confuse the small business or the micro business with the small business. With a small business you are not dependent on certain turnover limits . Rather, the term small business means that you operate a business that you do not have to enter in the commercial register. However, you also have the option of applying for a small business regulation for small businesses.

What needs to be considered when referring to the term small business

You have probably heard the term small business many times. But you will be amazed that you cannot find it in some areas. What exactly do you have to consider when talking about a small business?

  • The EU has precisely coordinated funding programs for you as a micro-entrepreneur .
  • The term small business does not exist in institutions such as the tax office, health insurance company and the Federal Employment Agency. There is no distinction between small and micro businesses at the tax office . You are free to apply for the small business regulation for any legal form. There is also no differentiation between health insurance companies.

Whether it’s a micro, small business, or sole proprietorship , they’re all businesses . Even the ancillary business is considered a company. Each of these terms should only be used to distinguish one size from a company. Therefore, it does not matter to the tax office whether you are a small business owner or a small business owner. Health insurance companies and the employment agency also see a demarcation only in ancillary business.

Micro Business 1