For purposes of the payroll tax credit, a qualified small business is one with less than $5 million in gross receipts over a five-year period ending with the current tax year. The taxpayer must not have had any gross receipts outside of the five-year period ending with the current tax year.

In the case of short taxable years, gross receipts must be annualized by multiplying the gross receipts for the short period by 12 and dividing the result by the number of months in the short tax year.  Additionally, related businesses must aggregate their gross receipts.