Fundamentals of Business

Introduction

Micro and Small enterprises definitions.

The European Commission adopted Recommendation 2003/361/EC on 6th May 2003, to take effect from 1st January 2005 (published in OJ L 124 of 20.5.2003, p.36).

Enterprise

An enterprise is considered to be any entity ( Person, partnership, organization, or business unit which has a legal existence, for which accounting records are kept, and about which financial statements are prepared) engaged in an economic activity, irrespective of its legal form. This includes, in particular, self-employed persons and family businesses engaged in craft or other activities, and partnerships or associations

Regularly engaged in an economic activity.

Staff headcount and financial ceilings determining enterprise categories.

1. The category of micro, small and medium-sized enterprises (SMEs) is made up of enterprises which employ fewer. Than 250 persons and which have an annual turnover not exceeding EUR 50 million, and/or an annual balance sheet.

Total not exceeding EUR 43 million.

2. Within the SME category, a small enterprise is defined as an enterprise which employs fewer than 50 persons and Whose annual turnover and/or annual balance sheet total does not exceed EUR 10 million.

3. Within the SME category, a micro enterprise is defined as an enterprise which employs fewer than 10 persons and Whose annual turnover and/or annual balance sheet total does not exceed EUR 2 million. Staff headcount.

The headcount corresponds to the number of annual work units (AWU), i.e. the number of persons who worked fulltime within the enterprise in question or on its behalf during the entire reference year under consideration. The work of persons who have not worked the full year, the work of those who have worked part-time, regardless of duration, and the work of seasonal workers are counted as fractions of AWU. The staff consists of: employees; persons working for the enterprise being subordinated to it and deemed to be employees under national law; owner-managers;

Partners engaging in a regular activity in the enterprise and benefiting from financial advantages from the enterprise. Apprentices or students engaged in vocational training with an apprenticeship or vocational training contract are not included as staff. The duration of maternity or parental leaves is not counted.

Entrepreneurship

is the ability to see and seize business opportunities and the courage to exploit them, characterized by innovation and risk-taking, an essential component of a nation's ability to succeed in an everchanging and more-competitive global marketplace.

Business start ups

Business start ups are considered under SMEs category and depending on the headcount and balance sheet total, it may fit among any of the definitions above.