Introduction. The article is devoted to the study of the influence of small and medium-sized business in the Sevastopol on the development of the economy of municipality and the Russian Federation as a whole. The positive and negative aspects of small and medium-sized enterprises are studied, which is necessary to assess the prospects for the development of the economy. Methods. The study used a wide range of general scientific methods, such as analysis and synthesis, abstract-logical, system analysis. The paper analyzes the official statistics of the Federal State Statistics Service and Krymstat regarding the development of small and medium-sized businesses in Sevastopol. Results. The study can note the dynamic development of small and medium-sized businesses relative to the period under review from 2017 to 2021. Medium enterprises have a turnover comparison base much lower than that of small enterprises, which shows higher growth. The results of the study show that in the Southern Federal District the growth in the turnover of small enterprises turned out to be slower compared to the Republic of Crimea and Sevastopol. The paper examines the positive and negative aspects of various forms of entrepreneurial activity and defines the role of municipalities as a solution to this contradiction. Thus, it has been established that for the successful development of small and medium-sized businesses, it is necessary to develop market economic mechanisms at the level of small enterprises, and as a favorable prospect develops, an increase in state support is required. Conclusions. The results of the study can be used in planning the development of small and medium-sized businesses, as well as in regional development and substantiation of the role of regional authorities in the socio-economic development of the municipality.