A person is a "small business" if its size does not exceed the size standard established by the U.S. Small Business Administration (SBA) in 13 CFR 121 for the primary commercial activity of the person (company).
Since the 2000-2001 registration year, the amount of the annual registration fee has depended on whether the registering company meets the SBA size standard for a small business. The SBA assigns a size standard, which is expressed, with a few exceptions, either as the number of employees or as the gross annual receipts of the company, for each industry group. In registration years 2000-2001, 2001-2002, and 2002-2003, we used the SBA size standard assigned to the Standard Industrial Classification (SIC) code for each industry group identified in the SIC system. In a rulemaking published in the Federal Register on September 16, 2002, (67 FR 58343) we adopted the SBA's use of the North American Industry Classification System (NAICS) codes as the basis for establishing size standards. You are to report the NAICS code that represents the major business activity of the registering company and use this code to determine whether your company qualifies as a small business. A representative list of the NAICS code and the current size standard for the most frequently reported hazardous materials industry groups is supplied here. If your industry group is not included in this list, the SBA's complete list of current size standards by NAICS code, is provided on the SBA's website.
The NAICS system was revised by the Office of Management and Budget in 2012 (referred to as NAICS 2012), which has been adopted by the SBA. If you do not know your NAICS code, visit the U. S. Bureau of the Census' complete table of the NAICS 2012 codes, with links to fuller 2012 NAICS definitions for each of the codes.
The Census NAICS 2012 table provides a search box. Enter a descriptive word or phrase. You may have to enter alternative words to find the appropriate code. The search box searches both the NAICS titles and the descriptions. You may also enter a NAICS code in the search box to see the definition of that code. Once you determine which NAICS code is appropriate to your major business activity, you will need to go the SBA's table of size standards to find the size standard appropriate for the NAICS code.
The NAICS system is revised every five years. Please note that some codes used in the 2007 version do not exist in the 2012 version. To find the 2012 equivalent of a 2007 code, type the 2007 code into the "2007 NAICS Search" box. The results page will show the corresponding codes in the 2002, 2007, and 2012 versions. Report the 2012 code on the Hazardous Materials Registration application.
The SBA's Size Standards Internet site provides other useful information on the SBA size standards. You may also call the size specialist in the appropriate SBA field office for assistance in determining your company's industry group and its size standard.
With a few exceptions, the size standard is either the number of employees or the gross annual receipts. The number of employees is defined by SBA as being the average number of employees (including all individuals employed on a full-time, part-time, temporary, or other basis) employed during the pay periods in the preceding twelve months. See 13 CFR 121.106 for the applicable SBA definition.
Gross annual receipts is defined by SBA at 13 CFR 121.104. "Receipts" generally means "total income" (or in the case of a sole proprietorship, "gross income") plus the "cost of goods sold" as these terms are defined or reported on Internal Revenue Service (IRS) federal tax returns. The term, however, excludes net capital gains or losses, taxes collected for and remitted to a taxing authority if included in gross or total income, and proceed from the transactions between a concern and its domestic or foreign affiliates (if also excluded from gross or total income on a consolidated return filed with the IRS). If your company has been in business for three or more years, the "annual receipts" is the receipts over its last three completed fiscal years divided by three. For companies in existence less than three years, the "annual receipts" is calculated by taking the receipts for the period the company has been in business divided by the number of weeks in business, multiplied by 52.
Whether annual receipts or number of employees is the size standard established for your industry group, you should consider the receipts or number of employees for the person required to register to determine whether your company (person) must pay the fee for a "Small Business" or "Not a Small Business." The person required to register may pay the fee appropriate for a small business even though it may be part of an "entity" (which includes affiliates) that the SBA does not consider a small business concern for its purposes.
The SBA periodically adjusts its size standards to reflect changes in industry characteristics and in 2010 began a comprehensive review of the standards. Almost all revisions to the size standards increase the number of employees or annual receipts that a company may have in order to qualify as a small business. The SBA recognizes only the current size standards for determining small business status.