graphDetermining whether or not a business is distinguished as “small” by the U.S. Small Business Administration (SBA) is important for owners wishing to register and bid for government contracts as a small business. Once a small business becomes registered as a government contractor, it is vital that the business precisely conform to the established standards of the SBA.

The definition of a small business is defined by one of two attributes: the average number of employees employed over the previous 12 months, or the average annual receipts over the prior three years; whichever represents the largest size.

The SBA also requires a business to adhere to further requirements in order to maintain its “small business” status. These requirements necessitate that the business: is organized for profit; has at least one place of business within the United States; primarily operates within the United States or makes significant contributions to the national economy through taxes or American materials or labor; is independently owned and operated; and is not a nationally dominant business. Some determining factors, such as size standards, may vary between industries. The business may be of any legally recognized form such as a sole proprietorship, partnership, or corporation.

Once a business is qualified as small, it may register as a federal contractor. In order to register, the business must first obtain a D-U-N-S number from the SBA, be registered with the federal government’s Central Contractor Registration (CCR), complete an Online Representations and Certifications Application (ORCA), report all North American Industry Classification System (NAICS) codes, and obtain a Past Performance Evaluation from Open Ratings, Inc. All registration and scheduling may be completed from the website.

The beginning of the new year is a good time to check for compliance, or register for the first time in order to compete for more business in 2012.

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