STTR and SBIR Accounting Services

Innovative Accounting Services

Team 80 Shepherds Small Businesses Toward SBIR & STTR Success

Innovative, paradigm-shifting ideas can flourish in the marketplace with an infusion of funding. 

The federal government rewards entrepreneurs with grants and contracts through the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, two highly competitive programs initiated via multiple federal agencies

Applying for SBIR and STTR can be daunting—especially for startups with a limited staff that does not include accounting specialists. 

Team 80 understands the challenges awardees face regarding the SBIR and STTR programs. Doing business with the federal government can be confusing and potentially unprofitable if you don’t understand the unique accounting rules required by Federal Accounting Regulations (FAR).

 

Compare our SBIR Accounting Prices and Expertise Today.

SBIR Awardee Services

$750 starting monthly
  • Installation of cloud-based government-compliant accounting system
  • Standardized chart of account setup suitable for both Phase I and Phase II
  • Time tracking system integrated with the accounting system
  • Payroll system setup
  • Monthly review of financial statements
  • Review of the tax and business efficiency of your legal structure
  • Dedicated Accountant
  • Accounts Payable
  • Invoicing the government
  • Monthly financial review meeting

Team 80’s STTR & SBIR Accounting Services

Our cloud-based accounting is an indispensable tool to help business owners run operations from anywhere on the planet – at any time.

We’ve done the hard work of bundling applications and services into a complete accounting system, so you don’t have to worry about anything. 

Team 80 functions as a small business accounting department to provide the following:

  • Payroll setup and processing
  • Accounts Payable (managing and paying bills)
  • Account Receivable (managing and invoicing customers)
  • Cash Management (outlining where the money is being spent and highlighting any areas of concern)
  • Financial Statement Prep (providing the client with the reports that show the financial results monthly)
  • Dedicated Chief Accounting Officer (an accountant who is a Controller level team member. Most small businesses can’t afford this level of expertise, and they are stuck using a “bookkeeper”)
  • Sales Tax (we can help with compliance with complicated sales tax laws as well as filing monthly sales tax returns)
  • Employee Expense Reports

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STTR & SBIR Accounting Requirements

The federal government has strict expectations regarding SBIR and STTR accounting requirements. 

To be eligible to receive STTR and SBIR awards and grants, small businesses must follow these ten requirements:

  • Complete separation of direct costs from indirect costs
  • Transparent identification of direct costs
  • An explanation for the allocation of indirect costs
  • Management of the expenses via general ledger
  • An unimpeachable timekeeping system
  • Appropriate direct/indirect labor distribution system
  • Interim determination of costs
  • A line item identification of cost
  • Separation of production and pre-production costs
  • Elimination of unallowable costs

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Team 80’s STTR & SBIR Accounting Framework

We base our accounting approach on the SBIR and STTR program phases. 

The government has different expectations for each phase, with the accounting requirements escalating in complexity and significance.

PHASE I


For Phase I of your SBIR and STTR project, the federal government expects that you’ll have a basic accounting system in place. The reason? Phase I awards typically range between $50,000 to $250,000, far less than the amounts changing hands in Phase II.

PHASE II


Here’s where the government significantly heightens its accounting requirements. Topping off at around $1 million, Phase II awards constitute a massive investment from any federal government agency, so officials need to be confident that you’ve accurately estimated direct and indirect costs while separating unallowable expenses.

PHASE III


In the “final” phase, the small business pursues its product or service commercialization. The SBIR/STTR programs do not fund Phase III.

Different Contracts Equal Unique Accounting Requirements 

There are two main types of contracts at play in SBIR and STTR programs: 

The contracts are awarded by the Department of Defense and other agencies that focus on construction instead of other agencies like the National Science Foundation, which issues awards in the form of grants. 

 

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Firm-Fixed Price (FFP)

FFP contracts are typically associated with Phase I, with the government and the small business agreeing to a fixed price. This price cannot be altered, no matter what unexpected costs pop up during the project. With this type of arrangement, the small business assumes all the cost risk and must deliver the product regardless if it ends up costing more than the amount stated on the contract.

 

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Cost-Plus Fixed Fee (CPFF)

On the other hand, Phase II contracts can take the form of either FFP or CPFF.

CPFF sees the federal agency reimbursing the small business for allowable costs in a cost-reimbursement contract. This means the government bears the bulk of the risk under a CPFF, but it’s up to the small business to make progress that the government agency deems acceptable. 

There’s also more government oversight inherent in a CPFF contract, with an “incurred cost” audit a mandatory step before funds are received. As a result, it makes a CPFF contract far more complex, with more costly regulations and more at stake for the small business.

Additional Phase II Accounting Compilations

The thought of an audit is enough to make most people sweat—but to continue your research, you’ll be subjected to an in-depth auditing process. And for the most part, federal agencies rely on the Defense Contract Auditing Agency (DCAA) to perform the task.

DCAA Auditing Components:

  • Review of your company’s financial stability
  • Review of your company’s accounting system
  • Evaluation of your proposed indirect rates 
  • Confirmation of your payroll tax deposits

The DCAA offers a guide, Information for Contractors, to give small businesses a window into how these “pre-award surveys” are conducted. 

However, this guide is not specific to SBIR and STTR programs. Your best bet is to enlist accounting experts—especially those with experience specific to government contracts!

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DCAA Pre-Award Survey

Small businesses competing for government contracts could receive the “Pre-Award Survey of Prospective Contractor Accounting System Checklist.” This checklist helps officials address the award criteria contained in Standard Form 1408 (SF-1408).

When your accounting system is fully calibrated to meet the survey criteria, it can lead to a stronger reporting system that bolsters your chances of being awarded future contracts. 

A DCAA-compliant accounting system—and DCAA Pre-Award Survey—are required by the Department of Defense, NASA, and the Department of Homeland Security … although other agencies reserve the right to spring a Pre-Award Survey on an SBIR and STTR award applicant.

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STTR and SBIR Timekeeping Systems

The highest indirect cost of any contract or grant recipient is the employees’ time spent running the day-to-day operations, writing proposals, and zeroing in on commercialization plans. 

As such, small businesses that receive federal contracts and grants must keep timesheets, with no exceptions.

  • Timesheets are proof of the hard work you put into your proposal. Without these crucial documents, there is no way the federal government can adequately reimburse the indirect cost of paying for employee labor. 
  • Timesheets must be kept by everyone in your business, from the President and CEO down the chain of command—even if they never perform any work billable to a customer, also known as a “direct cost.”
  • Timesheet entries must be made daily, and the documents must separately list each contract, grant, and other directly billed projects being worked on by employees. 

And timesheets are not only required by agencies such as the Department of Defense (DoD), which issues awards as contracts. 

Even agencies that award funds in the form of grants, like the National Institutes of Health (NIH) and the National Science Foundation (NSF), expect timecards as part of your accounting practices.

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Standard Form 425 — Federal Financial Report

There’s no shortage of SBIR and STTR-related documents. 

The Federal Financial Report (FFP) is a required form that grant recipients must submit to awarding agency. Concerning SBIR and STTR, the FFP is known as Standard Form 425 (SF-425), and it reports on the financial progress of the grant as applied to a small business’ SBIR and STTR project.

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Start Budgeting for Your SBIR Award Now

Budgeting for your SBIR or STTR Award

In the eyes of the federal government, an acceptable accounting system successfully separates the various expenses listed in your general ledger. Budgeting here means separating costs as Direct, Indirect, and Unallowable.

  • Direct Costs: Expenses incurred via specific work on a project, contract, or grant objective. Direct Costs are often related to engineering or research labor costs but can also include materials and equipment, subcontractor costs, and travel expenses directly related to the research project.  
  • Indirect Costs: These are supportive expenses that are indispensable to the success of your project. Not to exceed 40 percent of the direct costs, including administrative labor costs, utilities, accounting fees, telephone and internet expenses, rent, employer’s portion of payroll taxes, some legal fees, and indirect labor, which refers to vacation, holiday, and sick time. 
  • Unallowable Costs: The federal government will not reimburse organizations for expenses budgeted as “unallowable.” This could include federal income taxes, donations, fines, penalties, late fees, and first-class travel and alcohol.

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The last SBIR accounting system decision you will have to make is to sign up with Team 80.

Once you’ve done that, we’ll take the wheel and make sure that all systems are set up so that you have the information you need to run your business and meet all of the timekeeping and accounting requirements for Government Contractors.

Ready to simplify your accounting and level up?

LET'S GET STARTED!

We specialize in “back office accounting automation” providing an all-in-one solution for all of your accounting needs so that you don’t need to hire internally. We promise to save you money and time. We respect the fact that no one company can offer all the best tools so we partner with the best-of-the-best cloud-based accounting solutions, giving our expert help to set you up and keep you running smoothly with your specific accounting needs.

5500 Greenwood Plaza Blvd Suite 130
Greenwood Village CO 80111
303-825-2800