Small, Micro, Large or Medium?
A micro business is a subset of the small business community based on the number of employees within the company. While your company can technically be considered a small business even if it has dozens of employees, your business is a micro business if you employ fewer than 10 people. If you are a sole trader, self-employed, or have no employees, you operate a micro business.
Challenges of Micro Businesses
A micro business faces additional challenges that other businesses, including larger small businesses, do not face. You will have a harder time hiring employees and drawing in talent because of your lack of exposure. For the same reason, micro businesses do not have the same customer reach as larger companies. Traditional financial institutions may refuse to issue loans if your business is too small. Micro businesses have a harder time developing lines of credit with vendors because of the increased risk of default.
Micro Businesses Taxation
The taxes you pay on the earnings of your micro business are potentially not treated too differently than any other small business. If you incorporate your business, it is taxed at corporate tax rates. If you choose to operate as a sole proprietorship, you are taxed at your personal tax rate. Most micro businesses are more likely to operate under this structure because it takes less effort to register and file paperwork, but the business structure you choose for your micro business, or any small business, changes the way your taxes are assessed.
Small enterprises or businesses are privately owned corporations, partnerships, or sole proprietorships that have from 10 to 49 employees, which are fewer employees and/or less annual revenue than a regular-sized business or corporation. Small businesses in many countries include service or retail operations such as convenience stores, small grocery stores, bakeries or delicatessens, hairdressers or tradespeople (e.g., carpenters, electricians), restaurants, guest houses, photographers, very small-scale manufacturing, and Internet-related businesses such as web design and computer programming. Some professionals operate as small businesses, such as lawyers, accountants, dentists, and medical doctors (although these professionals can also work for large organizations or companies). Many small businesses are sole proprietor operations consisting solely of the owner, but small businesses can also have a small number of additional employees. Some small businesses that offer an existing product, process or service, do not have growth as their primary objective. However, in contrast, a business that is created with the intention of becoming a big firm is known as a startup. Startups aim for growth and often offer an innovative product, process or service.
Many small businesses can be started at a low cost and on a part-time basis, while a person continues a regular job with an employer or provides care for family members in the home. In developing countries, many small businesses are sole-proprietor operations such as selling products at a market stall or preparing hot food to sell on the street, that provide a small income.
Challenges of Small Enterprises
Small businesses often face a variety of problems, some of which are related to their size. A frequent cause of bankruptcy is under capitalization. This is often a result of poor planning rather than economic conditions. It is a common "rule of thumb" that the entrepreneur should have access to a sum of money at least equal to the projected revenue for the first year of business in addition to his or her anticipated expenses. In addition to ensuring that the business has enough capital, the small business owner must also be mindful of contribution margin (sales minus variable costs). To break even, the business must be able to reach a level of sales where the contribution margin equals fixed costs.
Small Business Taxation
The taxes you pay on the earnings of your small business are based on the status of your business. If you incorporate your business, it is taxed at corporate tax rates. If you choose to operate as a sole proprietorship, you are taxed at your personal tax rate.
A medium sized enterprise falls under the group of large enterprises, with the exception that they employ from 50 up to 249 employees.
Medium Business Taxation
Medium enterprises and include all limited liability and incorporated entities such as corporations, joint ventures, etc. and should be taxed at the corporate tax level.
Large enterprises employ 250 or more people. By definition, it generally falls under the description of a limited liability company
which is a legal entity representing an association of people, whether natural, legal or a mixture of both, with a specific objective. They can embody various forms, such as:
- voluntary associations, which may include
- nonprofit organizations
- business entities, whose aim is generating profit
- financial entities and banks
- programs or educational organisations.
Large Enterprise Taxation
Large enterprises are taxed as corporations and must produce financial documents with a corporate tax return at the end of their financial year.
Corporations & Other Entities
There is a wide range of legal entities present in Saint Lucia. What might be considered just a corporation can be further defined as a partnership, non-profit, joint-venture, etc. and some may be subject to certain taxes while others are not. Find all the information you need to know about the entity your business falls under and its tax implications below
Corporations & Other Entities
A corporation is a business or a legal entity representing an association of people, whether natural, legal, or a mixture of both, with a for-profit objective. Corporations can be distinguished based on the number of owners: corporation aggregate or corporation sole (sole proprietor). Some corporations are privately owned and some are allowed to be publicly traded by offering stakes in the company through the purchase of stocks; the owners of those stocks becoming stockholders or shareholders. The profits generated from corporation businesses are subject to corporate tax in Saint Lucia
A non-profit organization, also known as a non-business entity, not-for-profit organization, or non-profit institution is an organization traditionally dedicated to progressing on a particular social cause or advocating for a shared viewpoint. In economic terms, it is an organization which utilizes its surplus of revenues to further achieve its ultimate objectives, rather than distributing those funds to the organization's shareholders, leaders, or members. Being public extensions of a nation's revenue department, non-profits are charitable or exempt from taxation, meaning they do not pay income tax on the money that they receive for their organization. They can operate in religious, scientific, research, or educational settings.
The key aspects of non-profits are accountability, trustworthiness, honesty, and openness to every person who has invested time, money, and faith into the organization. Non-profits are accountable to its donors, founders, volunteers, program recipients, and the public community.
Although non-profit organisations are not subject to corporate income tax, financial statements and a corporate tax return form must be submitted annually.
An international business company or international business corporation (IBC) is an offshore company formed under the laws of some jurisdictions as a tax neutral company which is usually limited in terms of the activities it may participate in, but not necessarily from, the jurisdiction in which it is incorporated. While not taxable in the country of incorporation, an IBC or its owners, if resident in a country having "controlled foreign corporation" rules for instance can be taxable in other jurisdictions.
IBCs are not subject to corporate tax in Saint Lucia
An essential part of dealing with the IRD is Registration: getting registered for a company profile on our automated system; registering additional accounts on your profile; updating information on your company profile; closing of business accounts, etc. Take a look at the following links: