Knowing the type and nature of your business is important especially when you have to manage your business energy supply. The charges are different as per the consumption. So, it is imperative to clarify the distinctions between a microbusiness and a small business. This blog breaks down in simple terms.
Why Does It Matter?
You may have different energy contract options depending on your business type, may it be micro or small business. Commercial energy supplier need to know how much energy you consume. This helps them provide the right energy contract for your business that best suits your energy requirements. Knowing your business category can also save you money and headaches.
What is Microbusiness?
A microbusiness is a very small business. It is either based on the number of employees, the money you make, or how much energy you use.
To be classed as a microbusiness, you must meet at least one of these criteria:
- Your business has fewer than 10 full-time employees.
- Your turnover or balance sheet total is £2 million or less.
Your business uses:
- No more than 100,000 kWh of electricity a year, OR
- No more than 293,000 kWh of gas a year.
If you fall under any of the above-mentioned criteria, you are a microbusiness.
What if You’re Not a Microbusiness?
You might fall into the “small business” category instead. A small business is larger than a microbusiness but still not a big corporation. Again, you will qualify as a small business based on things like size, money, or energy usage.
Here’s how you know your business is a small business:
- You have under 50 full-time employees.
- Your turnover is £6.5 million or less, OR your balance sheet is £5 million or under.
You use:
- Up to 200,000 kWh of electricity a year, OR
- Up to 500,000 kWh of gas a year.
If you meet one or more of these criteria, you’re a small business, not a microbusiness.
Additional Information: Citizens Advice has also mentioned this criteria to guide the customers.
How Does this affect Your Energy?
Your energy contract depends on which category your business falls into. Microbusinesses and small businesses often have different terms compared to domestic or large business energy users.
Here’s what to expect as a small or microbusiness customer:
Contract Duration
Business energy contracts usually last longer than domestic ones – sometimes up to 5 years. Check your end date to avoid surprises.
Cooling-Off Periods
You may not get a cooling-off period after agreeing to a business contract. This is different from domestic energy contracts.
Separate Bills for Gas and Electricity
You might have separate contracts for gas and electricity, depending on how much energy you use.
Broker Costs
If you contact a broker to set up an energy supply for you, their fees will be added to your contract. Make sure these costs are clear and agreed upon before signing.
Not Sure How Much Energy You Use?
If you don’t know your annual energy usage, don’t panic. There are a few ways to find out:
- Check your bill. Your yearly energy usage is usually listed there.
- Contact your supplier. They can provide energy reports or estimates.
- Look at past energy contracts. They often include your usage information.
If your business is new, your energy supplier might estimate your energy use based on the size of your business.
What If You Work from Home?
If your business operates from your house, you are likely a domestic energy customer. However, if your energy usage suddenly increases due to business equipment, you may then need a business energy contract.
Why Knowing This Saves You Money
Understanding your business type helps you pick the right energy contract. This can prevent you from overpaying or locking into a contract that doesn’t suit your needs. Also, properly managed energy contracts lead to smoother budgeting.
Conclusion
Knowing if you are a microbusiness or a small business saves time, money, and stress. Look at your employee count, finances, or energy usage. Any one of these will reveal your category.
Still unsure? Get in touch with your energy supplier. They can guide you to the best contract for your needs.
Pro Tip: Always review your contract carefully, and don’t hesitate to ask questions. It is your business, and the right energy supply is key to keep it running smoothly.
