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8(a) Application Tip on Business Tax Returns

The SBA will verify the following:

Have you provided complete copies of the Federal business tax returns for the last three years.

  • 1120 or 1120s for Corporations.
  • 1065 for Limited Liability Companies and Partnership.
  • Schedule C for Sole Proprietors or Single Member LLC’s treated as disregard entity.

Tip: Do not submit copies of the business state tax returns. These are not needed by the SBA.

  1. Ensure that all schedules, attachments and statements that are mentioned within the business tax returns are included.
  2. Ensure that all business tax returns are signed by the appropriate individual.
  3. Do the tax returns indicate that the business has been operating in its primary industry (NAICS) code for at least the last two years? Your tax return should identify the six digit NAICS code, which is identified as your primary NAICS code with your 8(a) Application. Typically this is shown as the business activity code on the business tax return. If the NAICS code identified on the tax return is incorrect, and is not the correct NAICS code in which you earned your largest segment of revenue in, you must include a letter of clarification within your 8(a) Application from your tax preparer depicting the correct NAICS code that should have been reported as a explanation of the difference.
  4. If you have any questionable items on the schedules, attachments and statements that require additional explanations we suggest you or your tax preparer address these items within your 8(a) Application within certify.sba.gov.
  5. The business tax information should correspond with the financial statements (Balance Sheet and Income Statement) included within your 8(a) Application.
  6. Do your tax returns support the salaries, wages and distributions of the 8(a) applicant, officers or partners?
  7. Does the percentage of ownership identified on the tax returns correspond with the 8(a) Application ownership percentages identified within your 8(a) Application, stock certificates (corporation), Bylaws (corporation), Operating Agreement (LLC) or Partnership Agreement (Partnership)? If you operate a Sole Proprietor, is the individual who is the sole owner listed as the “Name of Proprietor” and also list the name of the business under “Business Name”.
  8. Does the tax return indicate the correct Employer Identification Number (EIN)?
  9. If the business has elected to be treated as an S-Corporation or a multi-member LLC, have you provided copies of all k-1’s.
  10. If your business tax return shows an amount due, have you included copies of the cancelled check, bank statement or IRS account balance transcript to show payment for all amounts indicated on the “Amount Owed” line of the tax return?
  11. What trend do the tax returns show? (i.e. downward trend in income, substantial gain in income, etc.) If the business concern’s tax returns show a significant downward trend or increase in sales you should be prepared to respond to potential SBA questions as to why?
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