The concept of small business and their criteria.

Entrepreneurship and business is an independent, initiative activity of individuals, undertaken at your own risk and under the property responsibility and directed mainly to receive economic benefits in the form of profits.

Small business in Russia is slow and difficult, but growing up, gaining experience and gaining their place in the economic structure, becoming an organic part of it.

Small business growth in a difficult environment General economic development of Russia represents his inner potential.

What is called the small business? There’s no single definition. Usually it is associated with the volume of activity and number of employees. According to these criteria and distinguish between small, medium and large business. In different countries these criteria are different, but most often use the following division of companies.

• large – enterprise, with more than 500 employees.

• medium – from 100 to 500 people.

• small – up to 100 people.

In the Russian Federation, this criterion is not the same for different sectors of the economy. Limits the number of (annualized) in the various fields established by the RF Law “On state support of small entrepreneurship in the Russian Federation” (article 3), are shown in table 1.

According to the law, subjects of small business are understood also to physical persons engaged in entrepreneurial activities without forming a legal entity.

Small businesses engaged in several types of activities (diversified), apply to such according to the criteria of the activity which share is the greatest in annual volume of turnover or the annual volume of profit.

Table 1. The number of employees of small businesses.

The role of small business in a market economy.

Speaking about the role of small business, it should be emphasized that this is not a side area of the economy. And its role in today’s fast-paced life has increased steadily. Small business organically included in the economic structure in the competitive environment and in the social division of labor. As the experience of developed countries, whereas in the past small businesses were created in the result of the desire of individual citizens to start their own business, at the present time the establishment of small businesses are often initiated by large companies, which commit them to certain types of production or to establish close relations with the market. Part of the small and medium enterprises included in the large production complexes through the contract and subcontract system, as well as through franchising. Large companies became clients of small firms, and the last their suppliers.

Specifically, the role of small business is that its development is promoted.

• the creation of new jobs.

• the introduction of new goods and services on the market.

• to meet the needs of large enterprises.

• to provide the population with specialized goods and services.

The creation of new jobs is the most important factor contributing to small business development and stabilizing the situation in society, as it provides livelihood for a significant part of the population. So, more than 7 million small companies in the US employ over 100 million people.

Another important aspect of small businesses is the introduction of new goods and services. Achievements of small business in this area has affected the production of safety razors, electronic watches, helicopters, stainless steel, copiers and more. In the US, for example, a small business produces more than 60% of all services, 50 % of all products and implements almost half of all ideas and innovations.

Apart from the fact that small businesses implement new products and provide jobs, they play an important role in the activities of large corporations doing marketing of their products, services and supplies. So, cars of well-known companies “Toyota” and “Honda” are going to the major Japanese factories, and most of the parts for them are made by small and medium-sized enterprises.

A great opportunity to sell products to large enterprises through a network of small firms provides the franchise. Using this type of license can be sold in a particular region of the goods or services using the trademark of a large company.

Finally, many small firms emerge and exist because they are able to meet the particular needs of the clients. For example, naturally, for repair antique clocks, antique products, etc. are small businesses.

Thus, small business provides the necessary mobility in the conditions of market, creates a deep expertise and extensive cooperation which is unthinkable without its high efficiency.

Measures to support small business.

Important for Russia formation and development of small business.

Small business should become the important platform on which to base the positive processes in the Russian economy, leading to the creation of a business environment. However, in order for a small business could fulfill their purpose, to realize in full their potential, to use all of its benefits, it needs support from the state.

The experience of developed countries shows that in each of them was developed by the state policy of development and support of small business. To implement this policy, a special state and public organizations. In the US, for example, since 1953, operates the Administration for small business, providing comprehensive support to companies.

A system of support for small businesses exists in the Russian Federation. In 1991, the resolution of the RF Government “On measures for the maintenance and development of small enterprises in RSFSR” in June 1995 the Federal Law “On state support of small entrepreneurship in the Russian Federation.

The law defined the main directions for state support and development of small enterprises, set the main forms and methods of state stimulation and regulation of activity of subjects of small business. For this work was established the State Committee on support and development of small business, and then the Ministry for Antimonopoly policy and support of small business.

In accordance with the Law the government is obliged to annually develop a Federal program of state support of small business and present it for consideration to the state Duma. In the regions of the Executive authorities and local self-government are developed, respectively the regional, sectoral and municipal programs.

In order to Finance programs and projects of development of small business created by Federal, regional and municipal funds of support of small business. The annual financing programs of these funds is carried out by many sources, including the Federal budget, regional and local budgets.

Because budget funds for lending to all businesses is not enough, the task is to look for funds to accumulate and allocate funds for the implementation of public policies to support small business. The funds have the right to provide to subjects of small entrepreneurship, preferential loans, interest-free loans, short term loans.

The law “On state support of small entrepreneurship in the Russian Federation” are some of the tax warranties: during the first four years since the establishment of the small enterprise conditions of taxation may not deteriorate. This means that if a possible tightening of the tax burden small business to pay taxes as it was paying them at the time of its formation.

The law stipulates that small businesses submit statistical and accounting reports in simplified manner.

Article 10 of the Law envisages the possibility of applying accelerated depreciation. If earlier accelerated depreciation of fixed assets was used only in the first two years of operation of enterprises, but now small businesses are entitled to apply accelerated depreciation for the entire period of activity of the enterprise. In addition, small businesses can write off as additional depreciation to 50 % (previously 20 %) original cost of fixed assets with service life more than 3 years.

As measures of state support of small business the law also provides for preferential conditions for crediting and insurance of small businesses; reserving for them the share of public procurement (at least 15 %); participation in the implementation of programs and projects in the field of foreign economic activity; favorable conditions in the provision of information and production technology support, as well as retraining of personnel.

Features of development of small business.

Factors of small business development.

The formation, functioning and development of small business, its structure and dynamics crucially depend on political and socio-economic conditions of the country.

From the experience of countries with developed market economies know how to affect the position of small business in overall health and socio-economic development level of the country. The rapid increase in the number of small businesses due to the advent of new technologies, types of equipment and technology, scientific developments, the increasing role of services in society. This is facilitated by the individualization of consumption changed in many ways, the focus of the production, traditional and well-established priorities.

The production opportunities of small business, specific areas of development consist of those market niches that large firms are left unoccupied, and the small see in them the possibility of success and profit.

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