A micro-enterprise, or microenterprise, is generally defined as a small business employing nine people or fewer, and having a balance sheet or turnover less than a certain amount (e.g. €2 million or PhP 3 million). The terms microenterprise and microbusiness have the same meaning, though traditionally when referring to a small business financed by microcredit the term microenterprise is often used. Similarly, when referring to a small, usually legal business that is not financed by microcredit, the term microbusiness (or micro-business) is often used. Internationally, most microenterprises are family businesses employing one or two persons. Most microenterprise owners are primarily interested in earning a living to support themselves and their families. They only grow the business when something in their lives changes and they need to generate a larger income.
History of the concept The concepts of micro-enterprise and microfinance were pioneered in 1976 by Nobel Prize recipient Muhammad Yunus, founder of the Grameen Bank (Bank of the Rural), in Bangladesh. The bank was established for the purpose of making small loans to the poor − predominantly women – to help them obtain economic self-sufficiency. The fundamental principle behind the Grameen Bank is that credit is a human right. This strategy was highly effective as the bank grew exponentially; from fewer than 15,000 borrowers in 1980, Grameen Bank had 2.34 million members by 1998, 7.67 million at the end of 2008, 97% of whom are women, and 9.4 million today.
Global definitions The term micro-enterprise or microbusiness refers to different entities and sectors depending on the country.
India In India, all the manufacturing and service enterprises having investment "Not more than Rs 1 crore" and Annual Turnover "not more than Rs 5 crore" come under this category.
Australia In Australia, the term refers to a business bigger than a single owner-operator, but having up to 5 employees.
European Union
The European Union (EU) defines "micro-enterprises" as those that meet two of the following three criteria and do not fail to do so for at least 10 years:
fewer than 10 employees balance sheet total below EUR 2 million turnover below EUR 2 million .
Philippines
United Kingdom The Office for National Statistics and the Department for Business, Energy and Industrial Strategy both maintain statistical records which officially classify businesses of 1–9 employees as being micro-businesses. The House of Commons Library maintains a briefing note pulling together these statistical sources.
United States In the United States, a different model is used, but the stated goals and core values are similar. According to the Small Business Administration, a microenterprise or microbusiness is defined as a business with 1-9 employees. They are the most common type of business. As a subcategory of small businesses, with sales and assets valued at less than $250,000 per year, they generally have less than five employees, including the owner. Additionally, such micro-enterprises generally need less than $35,000 in loan capital as a startup, and do not have access to the conventional commercial banking sector. The basis of microenterprise in the U.S. is entrepreneurship, recognizing that people have the right to apply their individual talents, creativity, and hard work to better their lives.
Armenia The 2020 edition of the Armenian Tax Code the concept of micro-enterprise defines in which case the company or sole owner doing business in this form, is exempt from paying sales tax. In Armenia the micro-enterprise business set up can take individual entrepreneurs, people who do some activities but cannot have employees. Starting 1 January 2020 people will be exempted from all main taxes and hire limitless employees for their economic activities. The tax called PIT(personal income tax) consists of 5000ADM for each month. Micro-enterprise programs, therefore, are built around the philosophy that the unique ideas and skills of entrepreneurs and would-be entrepreneurs should be provided business assistance and small amounts of credit to support the development or start-up of a small business, primarily through the U.S. Small Business Administration. Most organizations in the field also focus their services on those microentrepreneurs who, as defined by federal government standards, are low-to-moderate income. By definition, most of these entrepreneurs are minorities, recent immigrants, women, disabled or for other reasons have special challenges that reduce their ability to access traditional credit and other services.
Contributions to the larger economy
Microenterprises are said to add value to a country's economy by creating jobs, enhancing income, strengthening purchasing power, lowering costs and adding business convenience. According to information found on the Census.gov website, microenterprises make up 95% of the 28 million US companies tracked by the census. In Poland, in 2012, there were 1.7 million micro-enterprises, employing 3.5 million persons. In developing countries, microenterprises constitute the vast majority of the small business sector as a result of the relative lack of formal sector jobs available for the poor. Microenterprises in developing countries, then, tend to be the most frequent form/size of business. As explained by Aneel Karnani:
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