What business is small or medium?
What business is small or medium?
Under the law the concept of small and medium-sized entrepreneurship is defined as :
- citizens registered in accordance with the established procedure (as individual entrepreneurs) or as heads of peasant (farm) enterprises,
- consumer co-operatives and commercial organizations registered in accordance with established procedure (except for state and municipal unitary enterprises).
Small and medium-sized enterprises must satisfy 3 criteria.
Criterion 1. Participation in the capital for legal entities.
1. The total share of the Russian Federation, constituent entities of the Russian Federation, municipal institutions, foreign legal entities, foreign citizens, public and religious organizations (associations), charity and other foundations shall not exceed 25% in the authorized (joint) capital (unit investment fund) of legal entities.
An exception is assets of joint-stock investment funds and closed unit investment funds.
2. Share in the capital of one or several legal entities not representing SMEs shall not exceed 25%.
An exception is business entities (business partnerships) the activity of which lies in the practical use (implementation) of the results of intellectual activity1, the exclusive rights of which belong to the types of founders as follows:
- budgetary, autonomous scientific institutions,
- budgetary institutions, autonomous institutions, higher educational institutions,
- legal entities, founders (members) of which are legal entities included in the list of legal entities providing state support for innovation activity2 approved by the Government of the Russian Federation, if compliant with certain criteria.
Criterion 2. Average number of employees.
The average number of employees in the previous calendar year shall not exceed:
а) from 101 up to 250 employees inclusive for medium-sized enterprises;
b) up to 100 employees inclusive for small enterprises including up to 15 employees for micro-sized enterprises;
The average number of employees for micro-sized enterprise, small or medium-sized enterprise in the calendar year shall be determined taking account of all its employees including employees hired under civil-law contracts or part-time and taking into account actual hours worked, employees of representative offices, branches and other separate units.
Criterion 3. Proceeds from sale of goods (works, services).
Proceeds from sale of goods (works, services) excluding VAT or book value of assets (residual value of fixed assets and intangible assets) for the previous calendar year shall not exceed:
- for micro-sized enterprises – 60 mln rubles,
- for small enterprises – 400 mln rubles,
- for medium-sized enterprises – 1,000 mln rubles.
The stated values were fixed in 2013 and may be reviewed by the Government of the Russian Federation in 5 years, in 2018.
The category of SME shall be determined in accordance with the largest value for conditions determined in criterion 2 and criterion 3. For instance, if an individual entrepreneur, peasant (farm) enterprise, a legal entity (OAO, ZAO, etc.) satisfying criterion 1 has average headcount of 15 employees and proceeds from sale or book value of assets amounting to 500 mln rubles, then such economic entity is qualifies as a “medium-sized enterprise”. Or, on the contrary, if proceeds from sale or book value of assets of an economic entity is less than 60 mln rubles and average headcount of employees exceeds 250 employees, then such entity does not qualify even as a medium-sized enterprise, that is it represents a large-scale enterprise.
Note! The category of an SME may be changed only in case when values specified in criteria 2 and 3 change in two consecutive calendar years.
For further information about status of SMEs in Moscow please visit the “Moscow Small Business” portal.