Small, Medium, or Large? Clearing Up Business Sizes and Accounting Expectations
We often hear business owners say they are a "midsize" company or outsourced bookkeepers state they serve both small and midsize businesses. In reality, these terms are often misused and can add some confusion who a business really serves.
When most people think of a midsize business, they’re usually describing a larger “small business”—one that has grown but still lacks the complexity and scale of a true mid-market company. The financial needs and operational challenges of these businesses are very different from those of established midsize firms.
This blog will help define what small and midsize businesses really mean in terms of revenue, headcount, and financial complexity—and where bookkeeping fits into the picture.
Small Businesses typically have fewer than 100 employees and generate annual revenue of up to $50 million.
Midsize Businesses generally range between 100 to 999 employees and have annual revenue between $50 million to $1 billion.
Enterprise Businesses exceed 1,000 employees and generate revenue above $1 billion.
These classifications impact not just company operations but also the complexity of financial management. As businesses grow, so do their accounting and bookkeeping needs.
Types of Small Businesses: Startups, Early-Stage, and Established Small Businesses
Within the category of small businesses, there are distinct phases that significantly affect their financial management needs.
Startups
Revenue: Typically less than $1 million
Headcount: Often fewer than 10 employees
Financial Characteristics:
Highly volatile cash flow
Basic accounting, often founder-managed
Minimal financial controls, with bookkeeping focused on compliance and tax obligations
Funding challenges and heavy reliance on external financing or investors if not bootstrapped
Startups are often still validating their business model, which leads to significant financial uncertainty. Bookkeeping at this stage is primarily for compliance, basic budgeting, and ensuring cash management.
Early-Stage Businesses
Revenue: Typically between $1 million to $10 million
Headcount: Around 10 to 50 employees
Financial Characteristics:
Increased transaction volume and complexity
Growing need for financial visibility and forecasting
Starting to formalize accounting practices, budgeting, and cash flow management
Potential shift from cash accounting to accrual accounting
Early-stage businesses face increased operational complexity and require stronger internal controls and financial processes to manage growth effectively.
Established Small Businesses
Revenue: $10 million to $50 million
Headcount: 50 to 99 employees
Financial Characteristics:
Consistent, structured accounting practices
Need for detailed financial reporting, budgeting, and forecasting
Enhanced internal controls to prevent fraud and ensure accuracy
Often require advanced accounting software or cloud-based solutions
Bookkeeping and outsourced accounting really comes into its own in the Startup and Early-stage business phases and is then transitioned over to hiring somewhere during the Established Small Business phase as complexity, systems, or team engagement requires.
Comparing Small, Midsize, and Enterprise Businesses: Financial Complexity
Small Businesses: Simplicity with Growing Challenges
Revenue: Up to $50 million
Headcount: 1-99 employees
Common Financial Characteristics:
Basic bookkeeping needs (accounts payable, receivable, and payroll) to some complex accrual accounting
Owner-led or small team managing finances just starting to require fractional CFO assistance
Limited reporting requirements (cash flow, basic financial statements) early one with a transition to cash forecasting and budgeting around the 8-figure mark
Starting out with cash-based accounting but quickly transitioning to accrual in the early 7-figures
Fewer transactions but growing concerns over cash flow and collections
Small businesses often start with an in-house bookkeeper or part-time accountant. However, as revenue and expenses increase, they quickly reach a point where financial visibility and efficiency become a challenge. This is where outsourced accounting services provide value, helping them transition from manual or DIY processes to a structured financial system with proper internal controls.
Midsize Businesses: Increasing Volume and Complexity
Revenue: $50 million to $1 billion
Headcount: 100-999 employees
Common Financial Characteristics:
Larger transaction volume across multiple customers, vendors, and business units
More complex revenue recognition and expense management
Need for real-time reporting and financial analysis
Established budgeting, forecasting, and KPI tracking is a must
Often requires the implementation of a more expensive ERP system
Stricter internal controls to mitigate fraud risk
Enterprise Businesses: Highly Structured and Regulated Financial Operations
Revenue: $1 billion+
Headcount: 1,000+ employees
Common Financial Characteristics:
Fully staffed in-house finance and accounting teams
Strict compliance with GAAP, IFRS, or other regulatory standards
Sophisticated multi-entity consolidations and intercompany transactions
Extensive budgeting, forecasting, and strategic financial planning
High transaction volumes requiring ERP automation
External audits, investor reporting, and SEC compliance for public companies
How Our Outsourced Accounting Services Support Small Business Growth
At Basis 365, we specialize in providing outsourced accounting department services for small businesses on their journey to midsize. Our expertise in cloud-based financial management, internal controls, and process automation allows growing businesses to scale efficiently without the burden of managing an in-house accounting team.
If you're a small business looking to scale with financial clarity and confidence, Basis 365 can help you navigate the transition with best-in-class outsourced accounting solutions. Reach out today to see how we can support your growth.
