Classification of companies according to their size

There are different criteria for classifying a company according to its size as either small, medium or large
Companies have traditionally been classified by size into small, medium and large. As we already know, the first two are together referred to in their abbreviated form as SMEs (small and medium-sized enterprises). Moreover, lately a fourth group has been added to these three: microenterprises, which are also included in SMEs.
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The fact that a company is classified into one of these four groups is quite important since, for example, there are many public grants for SMEs that larger companies cannot apply for, and in order for a company to be able to take advantage of them it must prove that it classifies as an SME.

Criteria for classifying companies by size

There are several criteria for classifying companies by size. Here are some of them:

  • Economic criterion: classifies companies based on their turnover, i.e. the income obtained from sales.
  • Technical criterion: refers to the technological level, i.e. the innovation in capital.
  • Equity criterion: based on the net assets that companies have: assets, rights and obligations.
  • Organizational criterion: refers to the number of workers in the company and its organization.

The most frequently used criterion is the organizational one, which involves the number of employees.

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In this regard, Law 5/2015, on the promotion of business financing, notes that a microenterprise is one that has fewer than ten employees and an annual turnover below two million euros or total assets below two million euros; a small business is one that has a maximum of 49 employees and a turnover or total assets below ten million euros; and medium-sized businesses are those that have fewer than 250 employees and a turnover below fifty million euros or assets below 43 million euros. A large business is one that exceeds these parameters.
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