Save the hassle, prep for certification

So, you want to get your business certified, but are you completely ready to pursue certification? Business owners often apply for certification without first reviewing the management structure and other vital aspects of their business, in order to safeguard that all certification requirements are met. The key to certification success is to conduct an in-depth review of the structure of the business and the responses to the questions on the application prior to submitting. In some cases, minute structural changes that have little effect on the actual business can make all the difference between receiving a denial letter or a congratulatory certification letter.

Fulfilling the items listed below ensures qualification to begin the actual certification process:

  • Be a for-profit business
  • The business is not affiliated with another firm in such a way as to compromise its independence and control
  • Be at least 51% percent owned and controlled by a diverse owner (i.e. if seeking veteran certification the majority owner or owners must be veterans)
  • The diverse owner(s) must have control over the daily management and key decision-making, and set strategic policy of the company
  • Diverse owner(s) must be a U.S. citizen or a lawfully admitted permanent resident (Note: Some certifiers do not certify permanent residents.)
  • Diverse owner should be the highest paid person in the company, or will need explain why they’re not
  • Diverse owner holds the highest title in the company
  • Business has an established federal tax identification number often referred to as an EIN or FEIN (a sole proprietorship can operated under the diverse owner’s social security number)
  • If seeking any federal certifications, the business must be registered at

Now you’re thinking to yourself, ‘That’s easy. I can answer “yes” to all those questions. Let’s get my business certified!’  Despite qualifying on the list above, there is one more hurdle to jump before initiating the certification process – documentation.

As a strong recommendation, start collecting pertinent supporting documents before starting the application process.  Imagine attempting to quickly locate old banks statements or cancelled checks to provide proof of your initial equity investment!

Listed below are common required documents for certification – be aware that not all certifiers require the same documentation.

  • Current Resume of owners and key management team
  • History of Business
  • Evidence of Owner Diverse Status – this is different for each diverse classifications; examples include: using birth certificate or passport to determine gender for women (WBE), a completed physician’s form for a person with a disability (DOBE), or a DD 214 form for a veteran (VBE)
  • Evidence of U.S. Citizenship or Permanent Resident Status
  • Proof of Owner Equity Investment
  • Copy of bank signature card or bank resolution
  • Profit & Loss statement that aligns with most recent tax return
  • Balance Sheet that aligns with most recent tax return
  • Three years of federal income taxes for the business, if the business has been operating for less than 3 years personal income taxes from the owner(s) is provided in lieu of business taxes
  • Itemize employee payroll for the month prior to submitting application
  • W-2’s and/or 1099 forms from every officer, director or owner receiving compensation from the company for the most recent year
  • Business Structure Organizational Documents, examples include: Corporate Bylaws, LLC Operating Agreement, Partnership Agreement, Articles of Incorporation, LLC Certificate of Organization/Existence/Formation, any profit sharing or buy-out agreements, any stock or member certificates issued (front and back) and the associated ledger

Whew. Did you make it past the second hurdle? Preparedness with your documentation and information will allow for a smoother and efficient submission process. It’s not just the scenario we mentioned previously of nearly completing the application only to delay submission because you’re unable to locate a document. Have you looked at your bylaws or operating agreement since you started your business? Particularly for businesses with more than one owner, especially if not all owners are diverse, there can be issues that affect control. An easy one to look for is if the word unanimous is used. Even if in the actual running of the business the diverse owner has final say, the certifier will default to the organizing document. If it says a unanimous agreement is needed between a diverse and non-diverse owner — the diverse owner is not in control of the business. Therefore the business will be found ineligible for certification. Amending your organizational documents to accurately reflect your business may delay your submission and subject you to attorney fees, but it will save you a denial letter.

Another delay in the certification process is the reviewer needing to request extra information or additional documentation. One of the key duties asked by all certifiers is who has signature authority on checks. Do you have a family member whose not involved in the business listed on the business checking account in case of an emergency? If you do and left them off the application, expect to have the reviewer ask about them.

Organizing and thoroughly reviewing the supporting documents before starting your certification application lessens the chance of clarifying questions and the delays they can cause in the review process.