VonLehman is a champion of women and minority business owners. Our CPAs and business advisors can counsel clients about opportunities that may be available for small and minority and/or women owned businesses through organizations such as the Women’s Business Enterprise National Council (WBENC) and other organizations. Benefits may include:
- Access to supplier diversity and procurement executives at hundreds of major U.S. corporations and federal, state and local government entities
- Formal and informal opportunities to pursue business deals with national corporate members
- Access to mentoring, education and capacity development
- Eligibility for awards
- Personal and professional support through blogs, social media profiles and conferences
- Opportunities to advocate for WBEs at the national and regional level
As part of VonLehman's "Ask the Advisor" by VonLehman video series for business, here is additional information on Certifications that are available:
Minority Certification Descriptions
Certification is a review process designed to ensure that a small business that is applying for any specific certification is actually owned, operated and controlled by the applicants. It can be a complicated process, but can generally be successfully completed in a matter of months. Certification agencies implement the processes for government and private sector entities and ensure that only firms that meet the eligibility criteria of the individual programs are properly certified.
Ask the Advisor by VonLehman "Certifications" Worksheet is available to download here, and Kerri Richardson, CPA, discusses the topic on VonLehman's YouTube Channel here. Contact VonLehman for more information.
Definition of a Small Business
Although you may consider yourself a small business and are so by many definitions, the SBA has very specific criteria for small businesses that must be adhered to for as long as you maintain the certification of a small business government vendor. If you are pursuing a minority certification, be sure you also meet the criteria of a small business. Some of these criteria for any small business is that it must be:
- Independently owned and operated, regardless of type of ownership (such as sole proprietorship, partnership or corporation)
- Organized for profit
- Non-dominant in its field
It also must:
- Have a place of business located in the United States,
- Operate primarily within the United States or makes a significant contribution to the US economy through payment of taxes or use of American products, materials, or labor.
It must also meet certain size criteria:
- Size of business criteria
- average number of employees for the preceding twelve months OR
- sales volume averaged over a three-year period.
Examples by industry of SBA size criteria include:
- Manufacturing: Maximum number of employees may range from 500 to 1500, depending on the type of product manufactured;
- Wholesaling: Maximum number of employees may range from 100 to 500 depending on the particular product being provided;
- Services: Annual receipts may not exceed $2.5 to $21.5 million, depending on the particular service being provided;
- Retailing: Annual receipts may not exceed $5.0 to $21.0 million, depending on the particular product being provided;
- General and Heavy Construction: General construction annual receipts may not exceed $13.5 to $17 million, depending on the type of construction;
- Special Trade Construction: Annual receipts may not exceed $7 million; and
- Agriculture: Annual receipts may not exceed $0.5 to $9.0 million, depending on the agricultural product.
There are many types of certifications available for Small Businesses, of which we will describe five the following pages.
Some examples of certifications, with their descriptions following are:
1.A Minority Owned Business Enterprise (MBE),
2.A Women Owned Business Enterprise (WBE),
3.A Women-Owned Small Business (WOSB),
4.A Veteran-Owned Business (VOB) OR
5.A Disabled Veteran Business (DVBE)
Minority Owned Businesses (MBE)
A minority-owned business is a for-profit enterprise, regardless of size, physically located in the United States or its trust territories, which is owned, operated and controlled by minority group members. "Minority group members" are United States citizens who are Asian, Black, Hispanic and Native American.
Ownership by minority individuals means the business is at least 51% owned by such individuals or, in the case of a publicly-owned business, at least 51% of the stock is owned by one or more such individuals. Further, the management and daily operations are controlled by those minority group members.
For purposes of NMSDCs (National Minority Supplier Development Council) program, a minority group member is an individual who is a U.S. citizen with at least 1/4 or 25% minimum (documentation to support claim of 25% required from applicant) of the following:
- Asian-Indian: A U.S. citizen whose origins are from India, Pakistan and Bangladesh
- Asian-Pacific: A U.S. citizen whose origins are from Japan, China, Indonesia, Malaysia, Taiwan, Korea, Vietnam, Laos, Cambodia, the Philippines, Thailand, Samoa, Guam, the U.S. Trust Territories of the Pacific or the Northern Marianas.
- Black: A U.S. citizen having origins in any of the Black racial groups of Africa.
- Hispanic: A U.S. citizen of true-born Hispanic heritage, from any of the Spanish-speaking areas of the following regions: Mexico, Central America, South America and the Caribbean Basin only. Brazilians shall be listed under Hispanic designation for review and certification purposes.
- Native American: A person who is an American Indian, Eskimo, Aleut or Native Hawaiian, and regarded as such by the community of which the person claims to be a part. Native Americans must be documented members of a North American tribe, band or otherwise organized group of native people who are indigenous to the continental United States and proof can be provided through a Native American Blood Degree Certificate (i.e., tribal registry letter, tribal roll register number).
Certification is done at the local or regional level. The NMSDC and its affiliates do charge a non-refundable application fee. Certification must be renewed each year along with payment of annual fee.
Women Owned Businesses (WBE)
To become certified as a woman owned business, businesses must show:
All prospective members must provide clear and documented evidence that at least 51% or more is women-owned, managed, and controlled.
The business must be open for at least six months.
The business owner must be a U.S. citizen or legal resident alien.
Evidence must indicate that:
The contribution of capital and/or expertise by the woman business owner is real and substantial and in proportion to the interest owned.
The woman business owner must direct or cause the direction of management, policy, fiscal, and operational matters.
The woman business owner shall have the ability to perform in the area of specialty or expertise without reliance on either the finances or resources of a firm that is not owned by a woman.
Certification is done at the local or regional level. The Women's Business Council does charge a non-refundable application fee. Certification must be renewed each year along with payment of annual fee.
Women Owned Small Business (WOSB)
To qualify as a WOSB a concern must: be considered a small business as defined by the business’ applicable NAICS code, and at least 51% directly owned and controlled by one or more women who are U.S. citizens. Businesses may obtain WOSB certification from a third-party certifier approved by SBA. Businesses may also self-certify as a WOSB, but are then required to submit additional documentation to the WOSB Program Repository.
To qualify as a WOSB set-aside contract: the product/service to be procured must fall under one of the 83 eligible NAICS codes, and the anticipated award price of the contract must not exceed $5 million for manufacturing contracts or $3 million for all other contracts.
Certification is done at the local or regional level.
A Veteran-Owned Business (VOB)
Many minority group individuals have served America in the armed forces, and are eligible to take advantage of programs and services for veterans and service-disabled veterans. In 1999, the law expanded the eligibility for certain small business assistance programs, including those administered by SBA, to include veterans, and directed Federal departments and agencies establish and achieve a participation goal of 3% of the total value of all prime contract and sub-contract awards for each fiscal year for small businesses owned and controlled by veterans with service-connected disabilities.
There are no set-aside programs for veterans. There is, however, a 3% Federal prime contract and 3% subcontracting goal for all Federal agencies to achieve that applies to service-disabled veteran-owned small businesses. The 3 % contract goal for Federal agencies applies only to service-disabled veteran-owned businesses, not veteran-owned small businesses. According to the law, a concern owned and controlled by veterans or service-disabled veterans is a small business concern which is at least 51 percent owned by one or more veterans or service-disabled veterans; or, in the case of any publicly owned business, at least 51 percent of the stock of which is owned by one or more veterans or service-disabled veterans; and, whose management and daily business operations are controlled by one or more veterans or service-disabled veterans or, in the
case of a veteran with permanent and severe disability, the spouse or permanent care-giver of such veteran.
To prove that you are a veteran, you will need to have a Department of Defense Form 214 (DD 214), which is issued upon a military service member's retirement, separation or discharge from active-duty military. Registering with the VA can also be helpful, since it is the only government agency with a formal verification process, which adds legitimacy to the registration.
The VA also has a number of contracts set aside that fall first to service-disabled veterans and then to veterans. This program is especially appealing to veterans who have not achieved service-disabled status.
The first step of getting certified through the VA is registering with the VetBiz Registry. The Center for Veterans Enterprise provides the registry as well as step-by-step guidelines on applying for certification with the VA.
Once the VA begins the verification process, be prepared. They will evaluate business partnership agreements, corporate charters, organizational charters, board of directors, mission statements, inventory, service providers, bank statements and tax information. Any business may also be subject to site visitations during the verification process.
Certification is done at the local or regional level.
Disabled Veteran Businesses (DVBE)
The law defines a disabled veteran as a United States military, naval or air service veteran with a service related disability of at least 10 percent.
For a firm to be certified as a DVBE, it must submit a completed Small Business and/or Disabled Veteran Business Enterprise Certification Application and meet the following legal requirements:
It is a sole proprietorship or partnership at least 51 percent owned by one or more disabled veterans or, in the case of a publicly owned business, with at least 51 percent of its stock owned by one or more disabled veterans; a subsidiary which is wholly owned by a corporation in which at least 51 percent of the parent company’s voting stock is owned by one or more disabled veterans; or a joint venture in which at least 51 percent of the joint venture’s management, control and earnings are held by one or more disabled veterans.
One or more disabled veterans control the management and daily control of the daily business operations.
The disabled veteran(s) exercising management and control need not be the same disabled veteran(s) who own the firm.
It is a sole proprietorship, partnership or corporation with its home office located in the United States and is not a branch or subsidiary of a foreign corporation, firm or business.
Generally, certification is done at the local or regional level. There is no fee to apply for certification.
*All information summarized from www.sba.gov and www.sba.gov/content/guide-size-standards.
The technical information presented is necessarily brief. No final conclusion on these topics should be drawn without further review and consultation. Please be advised that, based on current IRS rules and standards, the information contained herein is not intended to be used, nor can it be used, for the avoidance of any tax penalty assessed by the IRS.
No Rendering of Advice: The information contained herein is provided for informational purposes only and is not intended to substitute for obtaining accounting, tax, professional or financial advice from a professional accountant and/or other relevant provider.
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