Many new companies are interested in joining the 8a certification program to take advantage of federal exclusive funds and set-aside contracts. The average 8th company pays more than $ 4 million each year as federal revenue. Therefore, obtaining a 8a qualification for a start-up company can generate a potential profit for the company
The enterprise has five major categories and its owner must comply to qualify as 8a. 1. Social disadvantage, 2. Economically disadvantaged, 3. Successful fulfillment of federal contracts, 4. No control questions, and 5. Good moral character. This article deals with qualification number 3: Potential Successful Success with Federal Treaties
An 8a company demonstrates that it successfully performs federal contracts, it uses a number of tests. The most challenging new business is the two-year business requirement. The company had to do business for two years before being included in program 8a. SBA largely waives companies and in this article I will describe three scenarios as to how the SBA will look at the applicant in the circumstances.
When a company needs a two-year exemption from certification 8 (a)
The two basic factors for the biennial exemption are:
1. Was the applicant doing business for two years, as evidenced by two tax returns that fulfill all 12-month tax cycles?
2. Does the applicant concern activities related to the primary NAICS code of the previous two years?
Both conditions must be met.
Sometimes it can not be clarified whether a two-year resignation is required. The next case is case study examples when a company has to submit a two-year exemption and when it is not needed.
Questions for the SBA:
Do you use any guidance on the amount of revenue your company would bid for a two-year resignation of $ 50,000? $ 250,000? This assumes that all other conditions are fulfilled
Yes, we examine revenue (no amount is determined because it is industry dependent) but we also look at where contracts / revenue (more as derived from 1 or 2 sources)
1. year – $ 0 sales
Year 2 – $ 189,000
Year 3 – $ 369,000
May 4 – The owner finally renounces the other's employment and dedicates himself to the business full-time. The company's total turnover was $ 457,000 in the fourth year.
January 5, year – application time
No exemption is required
Two-year exemption is not required because the company generated revenue over the past two years. However; SBA examines the owner's management experience to confirm successful opportunities
1. year – $ 100,000 in sales
2nd year – $ 500,000 in sales
Year 3 – $ 0 Sales
January 4, new owner buys the business at $ 200,000
Year 5 – January (Application Point)
YES Exemption required
This scenario requires a two-year exemption. Since the company did not generate revenue over the past two years in the primary NAICS code
1. year – $ 250,000 sales owner 1 (40%), owner 2 (30%), owner 3 30%) – the owner has 1 chairman and signs all contracts, highest pay and governs business decisions.
2nd year – $ 500,000 in sales
Year 3 – $ 500,000 in sales
Year 4 – $ 500,000 in sales
December 5th – Owner 1 buys owner 2 and becomes 70% owner. $ 500,000 in sales.
January 6 – (deadline for submission)
Two-year resignation is not required as the company exists for more than two years. In this scenario, the SBA thoroughly reviews the legal documents. The documents must indicate that the owner for some time is the chairman (highest officer) and the owner of the one has contracted for a while on behalf of the company. The SBA examines all possible verification issues so that no one else controls the owner.
When a two-year resignation is required, what is usually a winning scenario?
1. Generally, the SBA wants to sell at least $ 150,000 from the beginning of the companies.
2. At least 1 Revenue and Revenue.
3. Your business owner must have some degree of business experience and sensitivity.
4. 51% or more of the owners must work full-time for the enterprise.
Certification 8a is one of the best ways for a small business to grow with federal contracts. If your business is able to obtain such a certificate, it is recommended that you conduct an analysis of your business's sales opportunities.
Source by sbobet