How Does the SBA Count Employees and Receipts for Size Standards?

SBA size standards set the largest a business can be, measured by average number of employees or average annual receipts, and still qualify as small for SBA programs and federal contracting (13 CFR 121.201). The standard depends on the North American Industry Classification System (NAICS) code for the business's primary industry.

Employee-based standards. SBA counts individuals employed on a full-time, part-time or other basis, including workers obtained from a temporary employee agency, professional employer organization or leasing concern (13 CFR 121.106(a)). Volunteers who receive no compensation are not counted. Size is the average number of employees over the pay periods for the preceding completed 24 calendar months, and part-time and temporary employees count the same as full-time employees (13 CFR 121.106(b)). The employees of domestic and foreign affiliates are included.

Receipts-based standards. Receipts generally means total income plus cost of goods sold, as reported on IRS tax return forms (13 CFR 121.104(a)). Receipts do not include net capital gains or losses or taxes collected for and remitted to a taxing authority.

Related topics. The FAQ on drug-free workplace program components describes the elements of a workplace drug program, and the FAQ on why employers drug test explains reasons employers test.

Related SBA topics. The FAQ on the SBA drug-free workplace program describes SBA's grant program for intermediaries that help small businesses.