Frequently Asked Questions

What is the 8(a) Business Development(BD) Program?
The SBA's 8(a) BD program, was named for a section of the Small Business Act. The program was created to help small disadvantaged businesses compete in the American economy and gain access the federal procurement market.

What is the benefit of being classified as a Disadvantaged Business Enterprise program with the Department of Transportation?
The U.S. Department of Transportation’s DBE (disadvantaged business enterprise) program provides a vehicle for increasing the participation of females and disadvantaged businesses in state and local procurement. Each DOT-assisted State and local transportation agency is required to establish annual DBE goals, and review the scopes of anticipated large prime contracts throughout the year and establish contract-specific DBE subcontracting goals. Primarily three major DOT operating administrations are involved in the DBE program.

How does the Federal Government define a "minority or women-owned small business"?
Minority or Women-owned small business concerns are defined as small businesses, with at least 51 percent owned by a minority or a women; or, in the case of any publicly owned business, at least 51 percent of the stock of which is owned by a minority or a women. Daily management and business operations are controlled by one of these groups.

What is the difference between a Corporation and a Limited Liability Company (LLC)?
Like a Corporation, an LLC offers limited liability to its owners. Unlike a Corporation, however, an LLC is taxed as a Sole Proprietorship or a Partnership.This allows an LLC to pass all its income and losses through to the owners.

The LLC has an advantage over a C-Corporation which makes an S-Corporation tax election because the S-Corporation can only have 100 stockholders and the stockholders cannot be Corporations or non-U.S. citizens.

What is a General C-Corporation?
Tax purposes only , all Corporations are General C-Corporations when they are formed. This status permits them to pay a 15% federal rate on the first $50,000 of taxable income each year.

501(c) 3 FAQ

What is the difference between non-profit and tax-exempt status?
Non-profit status is a state law concept.  Non-profit status may make an organization eligible for certain benefits, such as state sales, property, and income tax exemptions. Most federal tax-exempt organizations are non-profit organizations, organizing as a non-profit organization at the state level does not automatically grant the organization exemption from federal income tax.  To qualify as exempt from federal income taxes, an organization must meet requirements set forth in the Internal Revenue Code.

How does an organization become tax-exempt?
To be recognized as exempt from federal income tax, most organizations are required to apply for recognition of exemption. Applying for recognition of exemption results in formal IRS recognition of an organization’s status. The IRS will recognize an organization as tax-exempt if it meets the requirements of the Internal Revenue Code. Organizations applying for tax-exempt status must have two basic requirements:  First, they must apply for an EIN (employee Identification Number) if they don’t already have one. Second, must submit an application for recognition of exemption.

The IRS sometimes recognizes a group of organizations as tax-exempt if they are affiliated with a central organization. 

How long does it take to process an application for exemption?
Applications are processed as soon as possible. The process can be delayed, however, for reasons ranging from simple errors on the application to issues concerning the qualification of the organization for exemption.