The question of qualifying as a small business often considers whether an individual owns and controls her own business. While proper ownership is one type of hurdle– what do you do when you have a stake in not just one, but multiple businesses? To protect your small business status, you have to start by thinking about affiliation.
The SBA’s general rule of affiliation is that two businesses will be considered affiliates if one owns or has the ability to control the other. That sounds simple enough, but – again – the SBA has very specific ideas on what it means to own or control.
The most basic example of affiliation is Common Ownership. If the same person owns more than 50% of two businesses, those businesses are automatically considered affiliates by the SBA (and therefore must include the annual receipts and the employees from both business in all size determinations).
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