10 Nov Microenterprise vs small enterprise – what’s the difference and why does it matter?
All businesses are not created equal — and in Estonia, companies are officially divided into four size categories: micro, small, medium-sized, and large enterprises.
This classification is more than just statistical — it determines the scope of reporting, accounting obligations, and the types of financial statements a company must submit.
How to distinguish between a micro and a small enterprise?
The most common business forms in Estonia are a Private Limited Company (OÜ), Sole Proprietor (FIE), and Public Limited Company (AS).
However, when it comes to company size, it depends on three main indicators:
- total assets
- annual revenue
- average number of employees
Below is a simple overview of how micro and small enterprises are defined:
Microenterprise
- Total assets: up to €450,000
- Annual revenue: up to €900,000
- Employees: up to 10
Small enterprise
- Total assets: up to €7,500,000
- Annual revenue: up to €15,000,000
- Employees: up to 50
(Figures correspond to the amendments to the Accounting Act effective from early 2025.)
What do these thresholds mean for entrepreneurs?
Reporting and accounting
The larger the company, the more detailed its reporting requirements.
Microenterprises can use a simplified annual report focusing on key indicators,
while small enterprises must submit a more comprehensive financial statement providing a clearer picture of assets, liabilities, and operations.
Audit and review obligations
Smaller companies are generally not required to undergo an audit,
but larger ones may fall under this obligation.
This means that as a company grows, the need for independent auditor verification of its financial data becomes more likely.
Financial management needs
For microenterprises, accounting usually focuses on tracking daily transactions and fulfilling legal obligations.
In small enterprises, financial planning and management reporting become increasingly important — including cost analysis, investment assessment, and cash flow forecasting.
How to determine your company’s category?
Company size is assessed each year based on the indicators at the balance sheet date.
If at least two out of three criteria (assets, turnover, employees) are below the defined thresholds,
the company falls into that category.
For example:
If a company has 8 employees and a turnover of €700,000, it is considered a microenterprise, even if its total assets slightly exceed the limit.
Why does this distinction matter?
The company’s size classification directly affects:
- the scope and format of reporting,
- the structure and cost of accounting,
- audit or review obligations,
- strategic planning and management decisions.
Correct classification helps avoid unnecessary bureaucracy and allows the company to focus on what truly matters — developing the business and keeping its finances under control.
In summary
A microenterprise suits those operating on a smaller scale who wish to keep accounting simple and cost-efficient.
A small enterprise fits businesses in a growth phase, expanding operations and requiring more detailed financial reporting.
If you’re unsure which category your company falls into, or how to adapt your reporting in line with the latest Accounting Act amendments, contact Ederly Accountants — we’ll help you find the right direction and ensure your financial year closes smoothly and accurately.