1 December 2015
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Statistics and Mapping Section
How do we define small business?
The Australian Bureau of Statistics
(ABS) defines a small business as a business employing fewer than 20 people.
Categories of small businesses include:
businesses (sole proprietorships and partnerships without employees)
(businesses employing between 1 and 4 people including non‑employing
businesses (businesses that employ between 5 and 19 employees)
Small businesses are more likely to
have independent ownership and be operated independently. Owners or managers of
small businesses tend to have close control of operations, undertake principal
decision making and contribute most of the operating capital.
The Australian Taxation Office (ATO)
uses a different definition of small business. According to the ATO a small
business entity is an individual, partnership, company or trust that is
carrying on a business and has less than $2 million in aggregated
turnover. Aggregated turnover is the annual turnover from a current business
and any annual turnover from other businesses that an individual is connected
or affiliated with. Note that a business that has less than $2 million in turnover
may have 20 employees or more while a business with fewer than 20 employees
may have turnover that exceeds $2 million per annum. The ATO also define a
micro business as having total business income of less than $2 million while a
small business has business income of between $2 and $10 million per
As the statistics used in the quick
guide are drawn from ABS publications we will be using the ABS definition of
What statistical information
is available on small business?
There are a number of publications released by the
Australian Bureau of Statistics (ABS) which shed light on the contribution of
small businesses to the Australian economy and how they operate.
Small business employment and contribution to industry
The Australian Industry publication (ABS Cat. no.
8155.0) is produced annually and provides estimates that draw on data collected
directly from the Economic Activity Survey (EAS)
conducted by the ABS and the Business Activity Statement (BAS) provided by
businesses to the ATO.
Australian Industry provides information by
business size (number of employees) and by industry on a number of key economic
indicators including: employment, wages and salaries, sales and service income,
total income, total expenses, operating profit before tax and industry value
added (IVA) for industries that are within scope of the survey collection.
This enables comparisons of contributions of small, medium and large
businesses to total employment and total IVA in
the economy over the short and longer term. IVA
is the measure of the contribution by private sector businesses in each
industry to Gross Domestic Product (GDP). The ABS defines GDP as the
total market value of goods and services produced in Australia within a given
period after deducting the cost of goods and services used up in the process of
production but before deducting allowances for the consumption of fixed
Small business count
The ABS also provides annual estimates
of the number of operating small businesses in Counts of Australian
Businesses, including Entries and Exits (Cat. no. 8165.0). The data
provided is a snapshot of actively trading businesses at 30 June each year.
Information is drawn from financial records held by the ATO of Australian
businesses that have been issued an Australian Business Number (ABN). The data
is then cleaned and stored in the ABS Australian Business Register (ABR).
Information is available on the
current number of actively trading businesses by employee size and industry, the
number of entries and exits of businesses that occur each year and survival
rates of businesses over one, two, three and four years. Data is also provided
on transitions between business size categories (for example, from businesses
employing 1 to 4 employees to businesses employing between 5 and 19 employees).
Information is also available on businesses by annual turnover size.
Small business exporters
Characteristics of Australian
Exporters (ABS Cat. No.
5368.0.55.006) provides financial year information on the characteristics and
value of international trading activities of Australian firms by business size
and industry. Data is drawn from the ABS Survey of International Trade and
Services, as well as data provided by the former Australian Customs and
Border Protection Service (Customs) (now superseded by Australian Border Force)
and records stored on the ABR.
Small business use of information
Selected Characteristics of
Australian Business (ABS Cat. No.
8167.0) draws information on an annual basis from survey responses of 6,500
businesses. The publication provides information on the rate of connection of
businesses (by firm size) to the internet and other forms of social media, and use
of the internet by businesses to place and receive orders as well as advertise
their products and services. The publication also provides information on the
type of internet connections used by businesses (such as Digital Subscriber
Line (DSL), Fibre to the premises (FTTP), cables, fixed wireless, mobile
wireless or satellite).
Small business use of flexible
Selected Characteristics of
Australian Business also provides
information on the rate of adoption by small businesses of flexible working
arrangements that allow employees to better balance work and caring commitments.
These arrangements include paid parental leave, flexible working hours and
Barriers to innovation for small
Selected Characteristics of
Australian Business provides
information on barriers to innovation for small, medium and large businesses.
Barriers can include lack of access to additional funds, skill shortages, lack
of access to knowledge and technology, the impact of government regulations and
compliance, the need to adhere to standards, and uncertain demand for new goods
Other statistics available
Selected Characteristics of
Australian Business publishes information
on the rate of foreign ownership by business size, the presence of franchise
arrangements, and method used to protect intellectual property. The publication
also provides information on the rate of firms seeking debt or equity finance
and their rate of success in securing finance.
Why do employment
estimates provided in the Australian Industry publication differ from ABS
Labour Force survey estimates?
The employment estimates from the Australian Industry
publication are different to those provided by the ABS Labour Force Survey
due to the different data sources and methodologies used. The Labour Force Survey
is based on the responses of a sample of residents of 26,000 private dwellings
who are interviewed every month for eight months. Employment by firm size from
the Australian Industry publication are based on responses to the ABS Economic
Activity Survey (EAS) and financial records included in Business Activity
Statements provided by businesses to the ATO.
In June 2014, the Australian Industry data series
shows 10.7 million people were employed in Australia whereas the Labour
Force survey showed 11.8 million people employed.
are estimates for the number of small business employees in Australia lower
than estimates for small business employment?
A simple explanation for the difference between employment and employee
estimates is employment estimates include other categories of workers as well
as employees. These categories include employers and account workers (or owner
managers of unincorporated enterprises) and contributing family workers. It has
been estimated by the ABS that other categories of employment account for 12
per cent of total employment.
Figure 1 — Composition of employment by employment type
Source: ABS, Labour Force, Australia, Detailed - Electronic Delivery,
May 2011 (Cat. no. 6291.0.55.001) and
Australian Labour Market Statistics, July 2011 (Cat. no. 6105.0)
The latest ABS estimates for indicators listed in this quick guide are provided
in three statistical snapshot publications produced by the Parliamentary
Library titled Small business contribution to economic performance in
Australia; Small business employment and working arrangements in
Australia; and Count of small businesses in Australia.
EAS has been conducted on an annual basis by the ABS since 1990. Over 20,000
employing businesses provide information directly from their financial
sector businesses in the Financial and insurance services industry are not
included in the survey. Only private sector businesses operating in Public administration
and safety, Education and training and Health care and social assistance are
included in the survey.
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