Sometimes. If your business has a cost-plus-type contract (CPFF), this may not be a big problem as long as your expenses are paid and your federal voucher payments are received in the same accounting period. Fixed price contracts (FFP) tend to be more problematic as payments received from the government seem to always be in advance of your direct cost burn rate (plus indirect rates), therefore, resulting in taxable income. The good news is good planning can maximize this benefit and simplicity. However, not many people plan and the chips fall randomly.
This is myth #12 of our SBIR Accounting Myths blog series. George Moker is a CPA and an entrepreneur who brings a real approach to managing the accounting needs of your firm. George created this series of blog posts to his more than 30 years of small business and startup experience in an attempt challenge the myths about an adequate accounting system and its importance within your organization.
For more information on how we can help with your SBIR accounting needs, please visit us at www.mokercpa.com