The Whys and Hows of Certifying as a Women-Owned Small Business
Become Certified as a Woman Owned Small Business
Among the benefits of certifying as a Woman-Owned Small Business, are the instances when federal government agencies limit competition for certain contracts to participating businesses or set aside a certain percentage of funding for WOSB-certified firms, which especially tends to happen in industries where women-owned small businesses are underrepresented. Some contracts are set aside even more specifically for economically disadvantaged women-owned small businesses (EDWOSBs), defined as those with a net worth of $750,000 or less.
The designation can provide entrée to events sponsored by local women’s business centers, such as educational support and business conferences, as well as WOSB-exclusive mentorship, training and networking opportunities. Those can help the bottom line in a more indirect way than government contracts by bringing you in contact with other certified companies within whom you can end up partnering.
Until recently, the WOSB program worked on the honor system. But starting in 2020, the SBA began requiring an application process that must be verified either through the administration itself (which is free) or an approved third-party certifying company, to ensure the legitimacy of the business and its owners.
Several documents must be submitted as part of the application, including: proof of the business owner’s U.S. citizenship and copies of owner resume(s); the business’ governing documents and articles of incorporation or organization, along with amendments to each; business and financial records and signed federal tax returns, both personal and business; and individual and business bank statements. The SBA has the right to request other paperwork if it needs explanation or additional detail.
To qualify, you will need to establish that you are a small business in the first place, based on the industry classifications and maximum allowable total annual receipts listed under each in the Code of Federal Regulations (13 CFR 121).
Then, you must establish that your business is at least 51% unconditionally and directly owned and controlled by one or more female U.S. citizens. “Unconditionally” means that ownership benefits can’t potentially transfer to someone else due to arrangements executory agreements or voting trusts. “Directly” means that ownership can’t flow through either a trust or another business.
The concept of control has a few components. The qualifying woman or women must: direct day-to-day management and business operations as well as longer-term decision making; bring the quantity and quality of managerial background necessary to run the business; and hold the highest officer position in the company and be fulfilling that role full-time. If the business is an LLC, the qualifying woman must control all of the LLC’s decisions.
If you and your business check all of those boxes, then it’s time to certify. We at Bellas & Wachowski can help you get started.