Woman and man looking at product during R&D in office with hard hat on table

The Top 20 Questions People Ask About SBIR Phase II

SBIR Phase II focuses on the development, demonstration, and delivery of your small business’ proposed innovation.

Phase II of the federal government’s Small Business Innovation Research (SBIR) Program continues the research and development (R&D) initiated in SBIR Phase I. Funding received in Phase II is based on the scientific, technical, and commercial potential of the proposed project. All SBIR grants are federally funded.

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The journey through the three phases of the government’s Small Business Innovation Research (SBIR) program is long and arduous, no matter which federal agency you’re courting for funds.

But when all your hard work pays off, and you receive your funding at the end of a phase, there’s nothing sweeter!

However, there’s no time to rest on your laurels. As soon as you make it through Phase I, it’s time to put your team into high gear and get to work on Phase II.

The second of three phases in your SBIR effort, Phase II sees the continuation of the research and development (R&D) you started in the first phase. It’s crucial that you press on with your efforts—don’t fall behind now when you’re so close to the finish line!

To help make this process as fruitful as possible, we’ve gathered the top 20 questions people ask about SBIR Phase II.

Table of Contents



  1. What Is SBIR Phase II?

Let’s start at the very foundation of SBIR Phase II, the basic definition.

In the second phase, your team takes the R&D that was initiated in phase I to the next level.

Phase II is the stage that truly gives life to your business, and more importantly, your technology. Phase II awards are given based on the results of the research and tests conducted in Phase I and are intended to fund the creation of an actual, workable prototype.

In the simplest terms, Phase II sees your innovative idea become an actual product.

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  1. How Much Funding is Awarded in SBIR Phase II?

The funds you receive in your Phase II award are based mainly on the results you achieved in Phase I and depend on which federal agency you’re working with.

It’s entirely possible that you could receive more than $1 million in a Phase II award, though the average is roughly around $920,000.

For example, the Department of Defense’s Navy awards funding that typically ranges from $500,000 to $1,700,000.

  1. How Long is Phase II of SBIR?

The SBIR Phase II award period typically lasts up to 24 months.

  1. What are the Eligibility Requirements for SBIR Phase II?

First and foremost, only small businesses that have received an SBIR Phase I award are eligible for SBIR Phase II awards.

And while each federal agency might have different technical requirements for Phase II, the general requirements for eligibility mirror those of Phase I and are as follows:

  • The small business must operate in the U.S., outside of a small number of subcontractors or consultants.
  • The company must have fewer than 500 employees.
  • The company must be majority-owned by U.S. citizens.

  1. How Does the Small Business Administration Define a “Small Business Concern” for the SBIR program?

As stated above, only small businesses can strive for an SBIR Phase II award. But what is a “small business concern?” The Small Business Administration (SBA) defines it as such:

  • Organized for-profit

  • Located in the U.S., operating primarily within the U.S., or makes a significant contribution to the U.S. economy through taxes or makes use of American products, materials, or labor.

  • Legally considered an individual proprietorship, partnership, limited liability company, corporation, joint venture, association, trust, or cooperative. If it is a joint venture, there can be no more than 49 percent participation by foreign business entities.

  • At least 51 percent owned and controlled by one or more individuals who are citizens of, or permanent resident aliens in, the U.S.

  • Has no more than 500 employees, including affiliates

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  1. What Federal Agencies Participate in SBIR Phase II?

The same 11 agencies that award funds in the first phase also participate in SBIR Phase II.

  1. Can a Small Business receive an SBIR Phase II Award from an Agency Other Than The One That Issued The Phase I Award?

Yes! Any small business that receives a Phase I award from one federal agency may receive a Phase II award from another agency.

This happens through a written determination that the topics of the awards are the same, and both agencies report the awards to the SBA.

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  1. Does SBIR Phase II Require a Commercialization Plan?

Yes! The SBIR Phase II award process requires a consideration of the proposal’s commercial potential. 

This includes the possibility to transition the technology to private sector applications, government applications, or government contractor applications.

Commercial potential in SBIR II may be demonstrated through:

  • The small business’ record of successfully commercializing other research.
  • Phase II funding commitments from the private sector or other non-SBIR funding sources.
  • General indicators of the commercial potential of the innovation.

  1. Can I Skip SBIR Phase I and Go Directly to Phase II?

No. The results of your SBIR Phase I work determine whether or not there will be a Phase II to continue your efforts. Only Phase I awardees are eligible for a Phase II award.

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  1. What is a “Direct-to-Phase II” SBIR Award?

Though you cannot “skip” Phase I and go directly to Phase II, if you already have a working prototype, there is a pathway known as “Direct-to-Phase II.”

This pathway is for small businesses that have already performed Phase I research through other funding sources. However, this is not available for the STTR program.

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  1. What is The “Fast-Track” Mechanism in SBIR Phase II?

Presently available in solicitations at various participating government agencies, the Fast-Track mechanism expedites the decision and award process for SBIR Phase II funding.

This is mainly for scientifically meritorious proposals with a high potential for commercialization. Fast-Track incorporates a submission and review process in which both Phase I and Phase II proposals are submitted and reviewed together.

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  1. What is the Difference Between Fast-Track and Direct-to-Phase II?

The primary difference between Fast-Track and Direct-to-Phase II applications is the timing of the Phase I project work. 

Phase I work is the first component of the project period in a Fast-Track. Direct-to-Phase II bypasses this step.

Instead, Direct-to-Phase II applicants must have performed the equivalent of Phase I research before applying.

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  1. What is SBIR Phase IIB?

When you renew your Phase II application for another round of funding, it’s known as SBIR Phase IIB. 

Offered at some federal agencies such as the Department of Health & Human Services or the Department of Defense, Phase IIB is mainly for R&D proposals that need a long time and more significant funds to get from theory to prototype.

  1. What is the Difference between STTR and SBIR Phase II?

The significant difference between the SBIR and STTR Phase II is that the STTR requires the small business to forge a partnership with a nonprofit research institution to collaborate on R&D in Phase II.

In both SBIR and STTR, the award goes to the small business, which is the primary contractor or awardee, while the nonprofit research institution takes on the role of a subcontractor.

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  1. Can I switch from the SBIR or the STTR Programs after Receiving Phase I Funding?

Yes! SBIR and STTR applicants can switch programs when they arrive at Phase II or Phase IIB to any active and open SBIR or STTR solicitation.

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  1. How Do You Apply for SBIR Phase II?

Small businesses can submit an SBIR Phase II proposal anytime between six months and two years after the start date of their Phase I award.

If you don’t know the start date of your Phase I award, it can be found on your Phase I award letter.

Your team’s principal investigator must remain in contact with the appropriate government agency to stay up-to-date, as well as to inform the agency of any potential roadblocks.

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  1. Can I Change the Title of my Proposal Between SBIR Phase I and Phase?

Yes! You can submit an SBIR Phase II proposal with a different title than Phase I. Just be sure to include the Phase I award number on all documents you submit for review.

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  1. Who Decides SBIR Phase II Proposal Submission Dates?

Awardees must establish proposal submission dates for Phase II. However, federal agencies may negotiate mutually acceptable Phase II proposal submission dates with each awardee.

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  1. What is the SBIR’s Federal And State Technology (FAST) Partnership Program?

The FAST Partnership Program funds organizations with the expressed purpose of increasing the number of SBIR and STTR awards from women, socially/economically disadvantaged individuals, and small businesses in underrepresented areas (typically, rural states). 

This is accomplished through outreach, technical and business assistance, and financial support.  

Go to the FAST Partnership Program web portal to learn more about funding and check out a state-by-state listing of current FAST awardees.

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  1. What are the SBIR Phase II Accounting Requirements?

Once a small business is awarded an SBIR Phase II contract or grant, the federal government has much higher expectations regarding tracking time, costs, and the overall accounting system. 

Simply put: There’s a lot of money on the line during Phase II, so the government will scrutinize every dollar and cent. What’s more, many SBIR/STTR Phase II awards are cost-plus-fixed-fee (CPFF) instead of a firm-fixed-price (FFP)—this designation presents a greater risk to the federal government.

Along every step of the way in SBIR Phase II, the government must be assured that the small business possesses an accounting system that can calculate indirect rates, separate direct from indirect costs, and isolate unallowable costs from allowable ones. 

And finally, your accounting system must be able to report how much has been billed on a contract and how much is still yet to be billed.

For a small business already stretched thin working on R&D for their innovative idea and starting to think about commercial applications, keeping the accounting side straight and clear can be a formidable task. 

Team 80 steps in as your partner in this accounting process, taking on the workload while staying in constant contact with your team from the start of your journey, all the way to the realization of your goal.


If you’ve been awarded an SBIR Phase II Grant learn more about Team 80’s SBIR and STTR Accounting Services. 


Team 80 CEO Sarah Sinicki

Sarah Sinicki


Team 80 CEO

Sarah is a leader focused on serving small businesses in various industries. She has worked with a multitude of companies over the last 25 years and loves helping business owners find success. Sarah is genuinely committed to unburdening Team 80 clients so that they have the freedom to focus on their business. In her free time, you can find her spending time with her husband, two kids, and her Yorkies, Marley and Ziggy. When she is not helping business owners, you can find her in a Reb3l Groove class dancing it out. Sarah is also an avid Colorado Avalanche fan, so if you ever want to talk about hockey, she’s your gal.


Female & Male Asian American Business Owners sitting at table working on accounting using laptop and calculator

How Do I Clean Up My Accounting Records?

We get it. Accounting and bookkeeping are complicated.

Small business owners come to us all the time with questions like:

Women Owner of a flower business sitting at a table with a laptop, invoices and calculator doing her accounting records“How do I clean up old QuickBooks transactions,” “How do small businesses maintain their accounts?”, “Why is bookkeeping so hard?”

Your time running a business isn’t best spent reconciling transactions or cleaning up balance sheets. You simply don’t have the time to focus your energy on accounting, and maybe because of it, your financial records have gotten a little chaotic and messy.

It happens. But should it KEEP happening? No. Unchecked messes can devastate a small business. Having impeccably clean books is everything.

For your business to survive and thrive, you MUST have clean account records and books. You should be able to access your business finances at the drop of a hat if need be.

Let’s take a look at some things you can do to clean up your chaotic bookkeeping.

Table of contents:

 

Are your personal and business accounts separate?

 

As mentioned in our previous blog, entrepreneurs shouldn’t blend their personal and business accounts.Female Business Owner sitting at table working on accounting using phone in hand and laptop on table

Every small business needs to have its own business account, period. Several banks offer low to no-fee, interest-earning accounts for small businesses, and almost all of these accounts have ATM accessibility and online/mobile banking tools.

“It will save you lots of headaches down the road if you keep your business and personal banking transactions in separate accounts. You should run all business transactions through a business bank account or credit card. Personal expenses should be kept separate.” — Sarah Sinicki, Director of Business Development, Team 80 Small Business Accounting and Bookkeeping

 

My software receives transactions from my bank feed; why are none of them reconciled?

You understand the importance of reconciliations. You know that when you don’t conduct regular bank reconciliations, you lose insight into how well your business is doing. You integrated your bank feed with your accounting software for this reason.

female business owner sitting at table with laptop, papers and calculator working on accountingBut what if your accounting system shows you’ve reconciled nothing? There’s a good chance you thought integrating your bank feed was all you had to do.

Unfortunately, that isn’t the case.

Importing transactions is only part of the process. No accounting software will do all the work for you. You still need to review, enter, and code each transaction into the correct general ledger account every time.

Compare transactions in your software with the same ones on your bank statements. Once you have reviewed everything, the difference between the ending balance in your accounting system and your bank statement should be $0.00.

 

How do I clean up old transactions in my accounting software?

Keeping your financial records clean is crucial for financial health visibility.

Purging old transactions by either deleting or voiding them out is a perfect way to unclutter and refine your reporting accuracy.

Doing so will ensure you have a true sense of where you stand when it comes to your finances.Senior Male Business Owner sitting at table working on accoutning

“If you are going to clean these transactions yourself, you need to make sure all transactions from your bank and credit cards are entered and coded in your accounting system correctly. The bank balance on your statement should tie to your books each month. If not, you will need to investigate and find out where the discrepancy is coming from.” — Sarah Sinicki

 

Is the balance sheet you manually keep track of missing entries?

You’re busy running your business. And you might forget to track an expense.

Errors happen – it’s human nature. But, when transactions fall through the cracks they can be hard to detect later. If you use an accounting spreadsheet, the best thing you could do is set it up as a check register, where you can enter each transaction and ensure it mirrors the bank statement like you would with your personal bank account.

As a quick fix, this method will suffice. In the long run, it won’t serve you well. For your business to grow, you need to invest in an accounting package and maybe consider hiring accounting professionals for help.

There is a lot at stake. If you make a mistake, you could be setting yourself up for incorrect tax filings or penalties.

If you don’t have the time, and you know you’re out of your element, it’s time to outsource your accounting to a trusted team.

We would love to bear your accounting burden! Get in touch with us today!

Team 80 CEO Sarah Sinicki

Sarah Sinicki

Team 80 CEO

Sarah is a leader focused on serving small businesses in various industries. She has worked with a multitude of companies over the last 25 years and loves helping business owners find success. Sarah is genuinely committed to unburdening Team 80 clients so that they have the freedom to focus on their business. In her free time, you can find her spending time with her husband, two kids, and her Yorkies, Marley and Ziggy. When she is not helping business owners, you can find her in a Reb3l Groove class dancing it out. Sarah is also an avid Colorado Avalanche fan, so if you ever want to talk about hockey, she’s your gal.


Robotic Rover on Mars Surface with Moon and Sun in the background

Put Your Innovations into Orbit with NASA SBIR & STTR Programs

Do you have an innovative idea worthy of deep space? We want to help you bring that idea to life with government funding.

In 2007, small business visionaries created a revolutionary technology that helped NASA’s Phoenix Mission find water on Mars.

Honeybee Robotics, Yardney Technical Products, and Starsys Research furthered NASA’s mission by developing an icy soil acquisitions device, lithium-ion batteries, and a wet chemistry laboratory. But if they didn’t have the government’s help, the ideas might have landed on the cutting room floor instead of Mars.

The Small Business Innovation Research (SBIR) program helped these small businesses bring their ideas to life.

The SBIR program has awarded funds to small businesses like yours for decades. The program funds early-stage research and development for specific government agencies like the National Aeronautics and Space Administration (NASA).

The NASA SBIR program might be the key to bringing your revolutionary technology to life and into Outerspace.

Keep reading to learn everything you need to know about NASA’s SBIR program.

What is the NASA SBIR Program?

The SBIR program is highly competitive and encourages domestic small businesses to engage in Federally-funded research and development for innovative technologies with commercialization potential.

There have been many discussions recently about the role small businesses can play in NASA’s upcoming directives. With NASA’s renewed interest in going back to the Moon and Mars, the potential for small businesses to help further their mission is at an all-time high.

Robert Cabana, Director of Kennedy Space Center, presented testimony before the Senate Committee of Small Business and Entrepreneurship, highlighting the SBIR program’s importance.

He noted that there had been a “Total spend to small business [of] more than $159 million,” which has gone to “fund the research, development, and demonstration of innovative technologies that both fulfill NASA needs and have significant potential for successful commercialization.”

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How much are NASA SBIR/STTR awards?

NASA’s combined annual SBIR and STTR budget hovers between $190M and $210M. Since 2011, NASA has awarded an average of $139M in Phase I and Phase II contracts annually. The maximum value for each Phase I SBIR award is roughly $125K, and Phase II’s maximum value is around $750K. NASA explicitly states that every award-winning SBIR Phase I proposal is a firm-fixed-price contract.

How many phases are in the NASA SBIR/STTR program?

There are three phases in the NASA SBIR/STTR program. Here’s how NASA’s interactive guide describes each Phase:

  • Phase I — a small business establishes the scientific, technical, and commercial feasibility of a product or service.
  • Phase II — a small business will demonstrate the functionality of its idea through research and development (R&D).
  • Phase III — the commercialization of innovative technologies, products, and services that have emerged from Phase I and Phase II.

NASA Logo Signage

Each Phase has a specific duration. The performance period for SBIR Phase I is up to 6 months, whereas the performance period for STTR is up to 13 months. The maximum performance period for both SBIR and STTR in Phase II is up to 24 months.

The NASA SBIR/STTR program does not let you switch from STTR to SBIR (or vice versa) after proposal submission. You also can’t trade during the award period of performance or Phases I and II.

Every year, NASA releases a list of SBIR/STTR topics, and the proposals for these topics are due in the first quarter of the calendar year.

Don’t worry if you haven’t met the solicitation period for the year – you can always try again next year. Still, you should prepare, stay ahead of the curve and keep your eyes open for upcoming SBIR NASA topics.

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What NASA topics are available?

NASA always has its eyes on the next frontier, and with the possibility of extended space travel, NASA needs innovative technology.

There are four Mission Directorates (MD) at NASA, and each MD has its own needs. Here are the Mission Directorates:

Each MD has topics or subtopics that support its needs. You can peruse a list of available topics to ensure that your idea will meet NASA’s needs.

Topics are organized in Focus Areas, like:

Illustration of Astronaut in space

  • Power and Energy Storage
  • Communications and Navigation
  • Sensors, Detectors, and Instruments

  • Life Support and Habitation Systems
  • Spacecraft and Platform Subsystems

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Am I eligible for SBIR through NASA?

You’re on the right path if your idea has research and technical innovation elements and meets NASA’s needs.

However, suppose you want to be eligible for the NASA SBIR program (or any SBIR program). In that case, you must operate a for-profit business with less than 500 employees. Your company must be located in the US. It must be at least 51% owned and operated by one or more US citizens or permanent residents.

For STTR, you need to meet all of the same SBIR requirements, and you need to have a cooperative research and development relationship with a US Research Institution (RI). Your Research Institution must be an accredited college or university, a Federal research and development center, or a non-profit research organization.

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How do I apply for NASA SBIR?

Are you sitting on the next revolutionary idea to help NASA explore the galaxy? If you are, it’s time to start the SBIR proposal process.

The proposal process can be challenging, and prepare yourself; it’s time-consuming (roughly 200 hours!). Your proposal must stand out above all the other applications, and you must prove your idea is substantive, and your team is prepared to see the project through to completion.

NASA scientists and engineers will evaluate your proposal, and they’ll determine whether or not you qualify based on five factors:

    1. Scientific/Technical Merit and Feasibility
    2. Experience, Qualifications, and Facilities
    3. Effectiveness of the Proposed Work Plan
    4. Commercial Potential and Feasibility
    5. Price Reasonableness

Are you thinking about including a letter of general endorsement? Think again. NASA won’t consider the blessings during the review process. If this sounds daunting, well, it is. Getting funds from the government is never easy.

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Does this all sound a little daunting? It’s understandable. Getting funds from the government is never easy. Take a deep breath, and don’t be discouraged. Team 80 is here to help!

We have over 20 years of extensive experience working with agencies participating in the SBIR/STTR programs like NASA. We’re familiar with the NASA proposal submission and solicitation process; we can put you on the path to NASA SBIR success!

Let’s put your dreams in orbit.

Free Consultation for NASA SBIR Accounting Services
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Team 80 CEO Sarah Sinicki

Sarah Sinicki

Team 80 CEO

Sarah is a leader focused on serving small businesses in various industries. She has worked with a multitude of companies over the last 25 years and loves helping business owners find success. Sarah is genuinely committed to unburdening Team 80 clients so that they have the freedom to focus on their business. In her free time, you can find her spending time with her husband, two kids, and her Yorkies, Marley and Ziggy. When she is not helping business owners, you can find her in a Reb3l Groove class dancing it out. Sarah is also an avid Colorado Avalanche fan, so if you ever want to talk about hockey, she’s your gal.


Indian American Small Business Man working on laptop at desk

8 Easy Accounting Tips to Help Small Businesses Maintain Their Books

Accounting is the language of business. Understanding that language is an essential part of keeping your small business alive.

Being a small business owner isn’t easy. And neither is being an unofficial accountant.

With the hectic day-to-day operations of running your business, how can you possibly make time to learn bookkeeping? The idea of sifting through endless stacks of financial documents and ledgers sounds overwhelming.

Still, you understand the importance of not letting your accounting fall behind. Because maintaining accurate financial records is vital to the health of your business.

That’s why you’re asking Google questions like, “how do small businesses maintain accounts?”

These simple accounting tips will help you and your labor of love succeed!

8 Easy Small Business Accounting Tips

  1. Invest in an accounting system
  2. Keep business and personal expenses separate
  3. Don’t wait until the end of the year to do your accounting.
  4. Meet with your CPA throughout the year.
  5. Look at your financial statements monthly.
  6. You need to understand your cash flow.
  7. Create a budget.
  8. You should hire a professional.

1. Invest in an Accounting System small business owner using laptop at desk looking at accounting software

Small business owners with no accounting experience need a reliable accounting system because that system is often the difference between success and failure.

Many affordable options will simplify data and organize your financial information to track expenses, income, and other activities easily. Xero, Quickbooks, Intuit, and Wave Financial, are just a few of them. You can even link your bank and credit card accounts directly to the software.

An accounting system makes your life easier and helps you to focus on business growth.

2. Keep Business and Personal Expenses Separate

New entrepreneurs often dip into their personal bank accounts in the early stages of business development. The practice of intermingling expenses can be problematic for many reasons.

Here are some of those reasons:Women Owner of a Small Business sitting at desk organizing business and personal expenses

  • Personal and legal liability
  • Tax implications
  • Audit trail issues
  • Bookkeeping problems

You can avoid these issues by opening a business bank account and establishing separate credit card accounts. Keeping personal and business accounts separate also improves your business credit score, helping you secure better business loans and reduce business insurance costs.

Run all business expenses through the business, and pay all personal expenses from a personal account. Trust me, your CPA will thank you at the end of the year. You don’t want to spend lots of extra money untangling combined finances.” – Sarah Sinicki, Director of Business Development, Team 80 Small Business Accounting and Bookkeeping

3. Don’t Wait Until the End of the Year to do Your Accounting

Do you remember January’s expenses when you wrap up accounting in December? You probably don’t.

Male Small Business Owner working on end of year accounting his laptopBusiness owners will too often make the mistake of waiting until the last minute to start thinking about their accounting. And they usually suffer from financial troubles as a result because waiting can cause significant issues.

You can handle most finances monthly.

Taking control of your finances and keeping bank reconciliations up-to-date monthly saves you from frantically scrambling at year’s end. We suggest you set a schedule so that you are touching financials monthly.

Well-managed finances close the door to preventable errors.

4. Meet with your CPA throughout the year.

You should meet with your CPA to review your books no less than twice yearly to ensure nothing falls through the cracks.black man cpa meeting woman small business owner

Meeting at least twice a year also helps your CPA understand your business. The person handling your finances should know your company inside and out.

Be proactive. If you meet with your CPA at least twice a year, they’ll have time to review your finances, uncover missed details, and devise effective strategies that you can implement to help your business before the deadline.

Don’t wait until tax time; it could already be too late.

5. Look at your financial statements monthly.

We can’t overstate the importance of understanding the real-time financial health of your business.

Black Eyeglasses Calculator and Pen sitting on paper financial statementUnderstanding your financial statements helps you discover where your business stands today and where it’s headed. It’s also an excellent way to learn if operations are running smoothly.

It’s also essential to always understand your profit margins and net income. Generating a monthly profit and loss report and reviewing revenue and expenses is a best practice we advise.

Never neglect your balance sheet since it shows your cash balance, outstanding accounts receivable, and all other assets and liabilities. Your balance sheet is a current snapshot of your business’s financial health; use it, love it.

When you stay on top of your financial statements, you’re empowered to make timely strategic business decisions. These decisions can help business thrive today and into the future.

6. You need to understand your cash flow.

Small business owners that don’t track cash flow are on the fast path to becoming former small business owners.

You must understand and optimize your cash flow because cash flow measures the real-time movement of dollars in and out of your business.male small business owner sitting at desk looking at laptop with calculator and financial statements on desk with 3 employees in the background

Your cash flow is positive when there’s enough money in your business account to pay bills. If cash is rapidly dwindling, you could have a severe problem.

Cash flow visibility helps you grow operations strategically. You can start by monitoring and documenting your incoming and outgoing funds using your accounting system.

You should also prepare a cash flow projection looking two to three months out to avoid surprises. If there are cash flow constraints, it’s time to leverage a business line of credit.

7. Create a budget.

You can use your financial statement and cash flow information to create a budget aligned with your business’s economic trajectory.

concentrated female business owner holding pen working on accoutningEvery entrepreneur should develop a budget. It’s an essential tool for financial tracking, especially for smaller businesses with limited funds that can benefit from operating within their means. A realistic budget can also help you understand the appropriate actions to take when problems arise.

Budgets help you anticipate future needs like repairs, expansions, and improvements without relying on credit. Accurate budget forecasting can also help you plan for staff hires and product and service investments and establish earnings and sales goals.

Even a poorly executed budget plan is better than no plan at all. Take some time and plan out what you think your revenue and expenses for the upcoming year will be. Then compare the budget to the actuals monthly. The variances in these numbers can give you some great insight.” – Sarah Sinicki, Team 80

8. You should hire a professional.

It is okay to admit when you’re in over your head – it’s also understandable. You didn’t launch a small business to become a full-time accountant.  black accounting manager-shaking-hands-with-successful-small business owner

You started your business because you’re passionate about your offering, and you want to provide customers with exceptional products and services.

You should focus on growing your business and serving your customers. And that’s not possible when you’re mired in book balancing, payroll management, financial forecasting, and tracking your accounts payable and receivable.

We want to do this work for you. Get in touch with us today!


Team 80 CEO Sarah Sinicki

Sarah Sinicki

Team 80 CEO

Sarah is a leader focused on serving small businesses in various industries. She has worked with a multitude of companies over the last 25 years and loves helping business owners find success. Sarah is genuinely committed to unburdening Team 80 clients so that they have the freedom to focus on their business. In her free time, you can find her spending time with her husband, two kids, and her Yorkies, Marley and Ziggy. When she is not helping business owners, you can find her in a Reb3l Groove class dancing it out. Sarah is also an avid Colorado Avalanche fan, so if you ever want to talk about hockey, she’s your gal.


Clients Fustrated with thier Bookkeepers Balance Sheets

15 Signs You Have a Bad Bookkeeper

You took an enormous risk by starting a small business. Are you letting a lousy bookkeeper put it in jeopardy?

As a small business owner, the fear of failure is always in the back of your mind. When combined with the stress of financial management, that fear can turn into pure dread.

You’re an expert in your chosen field—you shouldn’t have to be an expert at balancing books, payroll, and forecasting, too.

And since you’re on top of things and aware, you’ve wisely outsourced your bookkeeping.

But have you hired a skilled bookkeeper?

The last thing you need is an outsourced accountant tanking your trust and dreams.

We’ve pulled together a list of red flags and warning signs to help you determine what kind of bookkeeper you’ve hired.


  1. Your Bookkeeper is Constantly Out of Reach

As a small business owner, you need answers to finance-specific questions. And you need those answers fast. When your bookkeeper doesn’t return your phone calls or emails, it’s a significant problem.

Trust is essential when it comes to outsourced bookkeeping.

If you notice long stretches between replies from your bookkeeper, it’s time to ask why. There could be many reasons for the communication lapse. The bookkeeper might be overwhelmed or lack communication skills. Or, it could be more serious.

Maybe they don’t care?

You need to set ground rules (if you haven’t already) and communicate your expectations around acceptable communication timelines.

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Bookkeeper ignoring customer on phone

  1. They’re Constantly Behind on the Books

It’s easy to lose track of finances when your bookkeeper is continuously behind on the books. You might start making fatal errors like spending more than the business earns.

If your books are behind, then your business is behind. Growth is almost impossible when you’re regularly playing catch-up.

You must set deadlines to ensure that your bookkeeper is on track if you want your small business to thrive.

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  1. Your Bookkeeper is Panicked

Tax filing might give you a panic attack, but it should be second nature to your bookkeeper. The accountant should remain calm, relaxed, and collected under every circumstance.

If managing tax documents, payroll information, and quarterly payments to prepare for tax prep causes your bookkeeper to become frazzled, you have a severe problem.

A panicked accountant is a business threat.

Their panic could indicate inexperience. And the last thing you want is a bookkeeper who is in over their head.

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Panicked and Overwhelmed Booker

  1. They Never Approach You With Ideas

You’re so swamped with everyday business operations that you might be neglecting growth opportunities.

Your bookkeeper should have a deep understanding of your day-to-day financials. They should also provide you with helpful feedback. Should you lower costs or increase revenue? A great bookkeeper will have the answers.

If they aren’t coming to you with ideas and solutions to help push your company to the next level, ask them why.

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  1. They Don’t Understand the Basic Terminology

You’re so swamped with everyday business operations that you might be neglecting growth opportunities.

Your bookkeeper should have a deep understanding of your day-to-day financials. They should also provide you with helpful feedback. Should you lower costs or increase revenue? A great bookkeeper will have the answers.

If they aren’t coming to you with ideas and solutions to help push your company to the next level, ask them why.

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  1. They Don’t Understand the Reports

It can drive you crazy. Your outsourced bookkeeper dropped the ball, and rather than getting a simple explanation, they make excuses and shift responsibility.

Managing failure and disappointment is natural. But, there is a thin line between explanation and excuse, and the latter only delays the solution and blocks progress.

As a business owner, you require a bookkeeper who can take accountability and execute a proper response to any mistake. A competent bookkeeper will be able to address an error and take control in making it correct.

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  1. They Constantly Pass Blame or Make Excuses

Your books are crucial for recording financial transactions and activities like sales, purchases, earnings, payments, etc. Recorded data allows you to determine monthly/annual revenue and anticipate and calculate payroll and tax payments.

If your bookkeeper doesn’t understand your reports, accounts can be overdrawn, and you might find yourself in hot water with the IRS.

Nobody wants an IRS audit.

Failing to keep-up with numbers leaves you without a grasp of the money coming in and out of your business.

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Frustrated and worried businessman looks at bad accounting report

  1. They Don’t Understand Reconciliation

Proper bank statement reconciliation is crucial for every small business.

When your numbers are off and discrepancies pop-up, your bookkeeper probably isn’t performing reconciliations regularly – or at all.

Critical errors could go undetected if nobody verifies that your balance sheet transactions correspond with general ledger transactions.

Improper reconciliation makes you susceptible to fraud, costly bank errors, and unauthorized withdrawals.

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  1. Your Accountant Doesn’t Ask Questions

Your outsourced bookkeeper must understand how your company operates to identify cost-cutting opportunities. They also need to ask questions to have this understanding.

If your bookkeeper is afraid to ask questions out of the fear of appearing unqualified or inexperienced, they’re letting ego get in the way of good business tactics.

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  1. They’re Unable To Provide Answers To Their Work

You’ve noticed bounced checks. And this morning, you saw old transactions in your Quickbooks undeposited funds windows! What is going on?

Your accounts probably aren’t managed regularly or adequately reconciled by your outsourced bookkeeper.

When you ask your bookkeeper what’s happening, they can’t provide answers or insight.

Minor mistakes are inevitable, but a good bookkeeper is willing to go over routine tasks with you to establish what went wrong.

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  1. They Don’t Let You See the Books or Give You Access to Your Accounting System

Is your bookkeeper holding your records hostage? Is looking at your data like pulling teeth?

With today’s cloud-based accounting software, there’s no reason you shouldn’t have complete data access.

Put your foot down. Tell your accountant you want shared-access to the books. If they are reluctant to share that access with you, it’s time to work with someone who will.

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  1. They Don’t Understand Balance Sheets

The business has gone up, but your cash balance doesn’t reflect the increases. Where is that cash? The answer should be on your balance sheet.

Not everyone knows what to look for on their balance sheet or profit and loss statement. Still, an experienced bookkeeper will analyze the assets, liabilities, and equities data.

Your balance sheet is a snapshot of your business’ financial health. If you have any trouble identifying cash-flow problems, it might be time to seek another bookkeeper.

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  1. Coding Inconsistencies

Incorrect and inconsistent coding can take hours to rectify and cost your company thousands; it’s usually an honest mistake.

But entering incorrect accounting codes is a significant problem. Coding helps classify, record, and group all your transactions.

Wrong accounting codes can cause you to miss out on tax savings. Incorrect coding might also impact tax claims. In extreme circumstances, it can indicate your bookkeeper is stealing money. Either way, misclassifications can land you in hot water.

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  1. Your Accountant Is Patronizing

The person handling your finances must be the expert. But do you need that experience and expertise delivered with condescension?

Nobody likes being talked down to – the behavior isn’t conducive to a productive workplace. You wouldn’t let your staff treat you poorly, so why let your bookkeeper get away with it?

Be open with your bookkeeper. Let them know the terms with which you are comfortable speaking. You shouldn’t feel belittled because you aren’t up on the latest financial jargon.

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Patronizing Accountant on Phone with Client

  1. Your Bookkeeper is Controlling

Have you noticed that your bookkeeper wants complete, unsupervised control of your business’ financial management? If so, it’s time to start investigating why.

As we’ve already mentioned, trust is critical. When a bookkeeper wants to take control of everything inexplicably, your confidence can be a little shaken.

Handing over unsupervised access to your bookkeeper is like running your company blind. Some bookkeepers wind up stealing from a business because the business owners made it easy.

Your bookkeeper should be a business partner. You can avoid theft and mismanagement through collaboration

If you’re feeling uncertain about your bookkeeper, it may already be too late!

Team 80 offers full transparency, and we might save you money. Call us today!

Team 80 CEO Sarah Sinicki

Sarah Sinicki

Team 80 CEO

Sarah is a leader focused on serving small businesses in various industries. She has worked with a multitude of companies over the last 25 years and loves helping business owners find success. Sarah is genuinely committed to unburdening Team 80 clients so that they have the freedom to focus on their business. In her free time, you can find her spending time with her husband, two kids, and her Yorkies, Marley and Ziggy. When she is not helping business owners, you can find her in a Reb3l Groove class dancing it out. Sarah is also an avid Colorado Avalanche fan, so if you ever want to talk about hockey, she’s your gal.