Score a Home Run for Women-Owned Small Businesses by Sarah O’Keefe

Published on in Attorney Articles

By Sarah O’Keefe

Fifty years ago, women were fighting for equal employment opportunities. Today, women-owned businesses are cementing a powerful role in the fabric of the U.S. economy. Women-owned businesses now account for 39% of all U.S. firms, and if you add the number that are equally owned by men and women, that percentage rises to 47%. Unfortunately, women-owned businesses only employ 8% of the total private sector workforce and contribute 4.2% of total business revenues. Clearly, work is still needed.

If you're like most women-owned small businesses (WOSB), you're no stranger to the disparity that exists between women and their male counterparts. To this day, women are underrepresented in many industries. The federal government provides resources to equalize the playing field and reduce hurdles that hinder the entrepreneurial efforts of many WOSBs.

Creating a Level Playing Field

According t o section 8(a) of the Small Business Administration Act, the Federal government is required to award five percent of its prime and subcontract dollars to women-owned small businesses.

These contracts are called "set-asides" and are designated solely for small businesses. A subset of these set-asides is designated for WOSB and economically disadvantaged women-owned small businesses (EDWOSB). However, you must meet specific criteria to qualify.

Three Keys to Determining Eligibility

There are three main factors that contribute to eligibility. Ask yourself the following questions.

A. Is my business small?

Determining whether or not your business meets the U.S Small Business Association's size standards is the first basic requirement. While size standards are generally dictated by the number of employees along with annual receipts (your gross income plus the cost of goods sold), it's important to note that size standards vary by industry. There is a wealth of information about small business size regulations, and it's advisable to familiarize yourself with the nuanced terminology to make an accurate determination of your business size.

B. Is my business women-owned?

You'll need to ensure that your business framework is compliant with the federal government’s definition of women-owned.  Specifically, a WOSB qualifies as a small business (as determined by SBA standards):

1. if it is at least 51% owned and controlled by women who are U.S. citizens,

2. is managed by women who oversee day-to-day operations and make long-term decisions about the business model and its practices, and

3. has a NAICS code that qualifies for the women’s contracting program.

Additionally, a woman must occupy the most senior leadership role, such as CEO, president, or managing partner and be working on site during business hours. The physical location of your WOSB must be in the United States, and you’ll need to provide supporting documentation to prove that your WOSB meets the established guidelines. 

C. Is my business economically disadvantaged?

EDWOSB requirements include all of the WOSB parameters with additional criteria centered on personal net worth, adjusted gross income, and fair market value of all assets. To be deemed economically disadvantaged, a woman must furnish documentation showing that diminished capital and credit opportunities impair her ability to compete. To qualify for benefits allocated to EDWOSB, you must:

1. meet all the requirements of the women’s contracting program,

2. be owned and controlled by one or more women, each with a personal net worth less than $750,000,

3. be owned and controlled by one or more women, each whose average adjusted gross income for three years is $350,000 or less, and

4. have $6 million or less in business assets. 

Consider seeking legal advice regarding what information should be disclosed when applying for the programs and be sure to inform your attorney if you believe you have other assets that might affect your net worth because the application process can be lengthy.

Despite the considerable business advantages that government set-asides provide, many of the programs are grossly underutilized. Securing the necessary documentation and navigating the stringent processes may seem daunting, but those who qualify and capitalize on the benefits, have an opportunity for increased growth and success.

Even if you don't qualify as an EDWOSB, you may still qualify as a WOSB. It’s worth looking into it. If the government is working to level the playing field, maybe it’s time for every WOSB to score a home run.

About the Author

Sarah O’Keefe joined Burch & Cracchiolo in 2013 after completing an appellate clerkship for The Honorable Patricia K. Norris of Division One of the Arizona Court of Appeals. Sarah practices in labor and employment law and commercial litigation.

Originally published at AZ Big Media: Score a Home Run for Your WOSB

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