# SME: what is a small and medium-sized enterprise?

> What counts as an SME in Canada and Quebec: federal and Quebec definitions compared, the December 2024 Quebec figures and the classification mistakes to avoid.

Updated on October 15, 2026 · https://app.pilotiko.com/en/glossary/sme

An SME, or small and medium-sized enterprise, is a business of limited size, usually defined by its number of employees. Innovation, Science and Economic Development Canada defines SMEs as businesses with 1 to 499 paid employees, while Quebec's language office describes a PME as having fewer than 250 employees.

## In short
- ISED Canada: SME = 1 to 499 paid employees; small business = 1 to 99.
- Quebec's OQLF: fewer than 250 employees, management centred on the owner.
- Quebec had 228,622 small employer businesses in December 2024.
- Self-employed people with no staff are left out of these statistics.

## How does the federal government define an SME?

ISED's Key Small Business Statistics 2025 classifies businesses by number of paid employees: small businesses have 1 to 99, medium-sized businesses 100 to 499, and large businesses 500 or more. SMEs therefore cover businesses with 1 to 499 paid employees [1].

One detail matters a lot: enterprises without paid employees are generally not included in that publication [1]. A plumber working alone with no staff doesn't show up in those counts.

## How does Quebec French define a PME?

Quebec's Grand dictionnaire terminologique defines a petite et moyenne entreprise as a business with **fewer than 250 employees**, characterized by centralized, personal management around the owner-manager, flexibility, adaptability and innovation, and close ties with its stakeholders [2].

It notes that management is often shared by a team that also shares ownership, and recommends writing the acronym without periods: PME [2]. The definition describes a way of running a company as much as a size.

| Source | Threshold | Basis | Typical use |
|---|---|---|---|
| ISED (Canada) | 1 to 499 paid employees | Employee count | National economic statistics |
| ISED: small business | 1 to 99 paid employees | Employee count | Provincial comparisons |
| OQLF (Quebec) | Fewer than 250 employees | Size and management style | French terminology and writing |

Funding programs often use their own definition; always read the criteria of the program you're applying to.

## How many SMEs are there in Quebec?

**Small employer businesses in Quebec, December 2024**

- Small businesses (1 to 99 employees) : 228,622
- Medium-sized businesses (100 to 499) : 3,947
- Large businesses (500+) : 666
- Total employer businesses : 233,235
- Share of small businesses (228,622 ÷ 233,235) : 98.0%
- **= In Quebec, 98 of every 100 employer businesses are small businesses; adding medium-sized firms, SMEs make up more than 99.7% of the total.**

## How much of the workforce do small businesses employ?

The same publication reports that small businesses with 1 to 99 employees accounted for 46.6% of private-sector employees in Canada in 2024, against 17.0% for medium-sized and 36.4% for large businesses. Quebec represented 22.1% of Canadian private-sector employment [1].

For a service company, the takeaway is simple: most of your competitors, suppliers and often your customers are SMEs too.

## Which classification mistakes are common?

- Quoting 98% of businesses are small without saying it refers to employer businesses.
- Applying ISED's 500-employee threshold to a program that uses another test, such as [revenue](https://app.pilotiko.com/en/glossary/revenue).
- Mixing small business (1 to 99) and SME (1 to 499) in the same table.
- Assuming an SME is exempt from Quebec's [Law 25](https://app.pilotiko.com/en/glossary/quebec-law-25), which applies to anyone carrying on an enterprise that holds personal information.

## Why do service SMEs have particular needs?

The OQLF definition puts it well: management revolves around the owner-manager. In a six-technician company, the same person answers calls, prepares quotes, runs payroll and watches the numbers. The tools that help are the ones that bring information into one place, like a [dashboard](https://app.pilotiko.com/en/glossary/dashboard) built on real data.

It's also why many SMEs choose [software as a service](https://app.pilotiko.com/en/glossary/saas) over software installed on site: no server to manage and a predictable subscription.

## How does Pilotiko serve SMEs?

Pilotiko is a Quebec web application built for service SMEs. It shows a virtual office where each department is a room and each employee or [AI agent](https://app.pilotiko.com/en/glossary/ai-agent) has a desk. Online booking, assignment based on calendars and workload, internal reports and a hosted website are available today; any action that touches a customer, money or a send waits for a person's approval.

## Frequently asked questions

### How many employees does an SME have?

It depends on the source. In Canada, ISED defines an SME as having 1 to 499 paid employees, while Quebec's OQLF uses fewer than 250. Check the definition used by the agency or program that concerns you.

### What's the difference between a small business and an SME?

For ISED, a small business has 1 to 99 paid employees, and SMEs also include medium-sized businesses up to 499. Every small business is an SME, but not the other way around.

### Is a self-employed person an SME?

In everyday use, you could call it a very small business. ISED's statistics, however, generally exclude businesses with no paid employees.

### How many small businesses are there in Quebec?

ISED counted 228,622 in December 2024, or 98.0% of Quebec's employer businesses. Only Ontario had more.

### What does PME mean?

PME is the French acronym for petite et moyenne entreprise, the equivalent of SME. Quebec's language office recommends writing it without periods.

## Sources

1. Innovation, Science and Economic Development Canada, « Key Small Business Statistics 2025 », https://ised-isde.canada.ca/site/sme-research-statistics/en/key-small-business-statistics/key-small-business-statistics-2025 (accessed on 2026-10-15)
2. Office québécois de la langue française (Vitrine linguistique), « petite et moyenne entreprise (GDT) », https://vitrinelinguistique.oqlf.gouv.qc.ca/fiche-gdt/fiche/8365976/petite-et-moyenne-entreprise (accessed on 2026-10-15)