What are the Benefits of a GSA Schedule …and Will it Work for Me?

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If your business is considering becoming a federal contractor, you probably want to consider using a GSA Schedule Contract, especially since many federal agencies use GSA Schedules, including the Armed Forces.

Although applying for a GSA Schedule can be challenging, these contracts can be fiscally rewarding and offer several benefits that make it worthwhile. If you’re a small business, another point to consider is that 80% of GSA MAS contracts go to small businesses.

What is a GSA Schedule?

GSA Schedule Contracts, also known as GSA Schedules or Federal Supply Schedules, arean indefinite delivery, indefinite quantity (IDIQ), long-term contracts under the General Services Administration’s Multiple Award Schedule (MAS) Program. The GSA contracts are agreements by the federal government to purchase goods and services from private companies. They serve as a fast and easy contracting vehicle for both customers and vendors.

The Value of GSA Schedules

The GSA Schedule contract program expenditures contribute billions of dollars to the economy every year. In fact, more than $40B flows through GSA Schedule contracts annually. In FY11, GSA had over 19,000 schedule contracts, and approximately 40% of the 19,000 contracts won government business. Consider, too, that approximately 5% of the GSA Schedule contracts win 80% of the business.

The Benefits

As a small business owner, GSA Schedules directly benefit you in the following ways:

  • Streamlined buying process with a quick turnaround. Buyers like the schedule because the purchase process is fast, simple and rarely subject to protest.
  • Once a business applies successfully to sell to a government department or agency, including the Armed Forces, it can sell to any part of the government via the GSA Schedule contract vehicles.
  • No cost data is required to gain procurements.
  • Prices are based on your commercial prices, and procurements are based on “best value”, not the lowest price.
  • Schedule contract procurements don’t have an order size limitation. Multimillion-dollar orders can be processed using the Schedule contract ordering process.
  • For IT firms, using STARS II (a specific GSA vehicle set aside for 8(a) companies) is strategically beneficial. This is because it can extend the 8(a) life beyond the nine-year limit since they can bid on 8(a) set-aside contracts that are procured under STARS II as long as that contract is alive. The strategy is to get the STARS II contract in place one or two years before the 8(a) graduation, thus extending access to some 8(a) contracts three or four years beyond graduation.

The Disadvantages

When considering GSA Schedules, you should also be cognizant of the disadvantages involved. These include the following:

  • The cost of obtaining a Schedule (i.e., the cost to the company for preparing the proposal and negotiating the contract). It is an expensive process to prepare the proposal and negotiate the agreement. It costs you time if you do it yourself, and it costs you money if you hire a specialist.
  • The cost to the buying agency (i.e., the cost that a government agency pays GSA to administer GSA contracts).
  • The sales minimum required by GSA Schedules. If you don’t achieve that minimum, you may lose the contract. Typically, the minimum is $25,000.
  • Not all procurements will be available to the GSA Schedule. Some contracting officers prefer to keep certain procurements in the normal (historical) procurement process.
  • Some agencies don’t use GSA Schedules.
  • Reporting requirements. Contractors need to set up their accounting system to track GSA sales and payments because they are required to pay a quarterly percentage (.75%) of the sales or payments. Periodically, a GSA representative will do a site visit to audit this process and make sure that GSA receives the proper amount.
  • Marketing requirements. GSA expects contractors to market their GSA Schedule. This means they expect contractors to publish the Schedule on their website and the GSA advantage website. You can expect GSA to audit your marketing efforts when they audit the IFF payment process.

It’s also worth noting that the median time to first award is between 8-9 months; and in general, awards for more complex products and services take more time than awards for selling commodity type products. Additionally, because of the expense of getting on the GSA Schedule, you want to be sure that your customers are willing to use the schedule and that you are committed to selling to the government.

Final Thoughts When Considering GSA Schedules

As a final step in the process of considering whether or not a GSA Schedule is right for you, ask yourself the following questions:

  • Having analyzed the market, bid opportunities, and cost to win business on one Schedule and SIN in GSA MAS, are there other schedules or even other contract vehicles to consider?
  • Should you seek opportunities as a subcontractor rather than a prime contractor in order to give yourself some experience in the government contracting world?
  • Do you need a Schedule contract to pursue future subcontract opportunities?
  • Do potential customers you identified use GSA Schedules? If not, can you convince them to use them?
  • Do customers favor your products and services over the competition?
  • How can you differentiate your company from other competition on the Schedule/SIN(s) where you want to make a proposal?

Ultimately, you have to make the decision that is right for you. If you have further questions regarding GSA Schedules, contact us at KDuncan & Company.

How to Prepare for Submitting Defensible Bids

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Last month, I spent a considerable amount of time supporting a favorite client in answering “Clarifications and Discussion” coming from the government.  My client and his subcontract team had submitted a proposal earlier in the year and the government was asking them to support their costs. As it turned out, neither the prime nor the subcontractors had developed the support before submitting their cost proposals.  In fairness to the team, the government had not required them to submit supporting cost and pricing data at the time of submission.  So, our response to clarification request entailed a considerable amount of research, time, and stress to complete.  In addition, each member of the team is unsure whether they will make or lose money if the contract is awarded to the team.

To avoid this, contractors should always prepare and submit a defensible bid; whether the government is requiring it for the procurement or not.

Defensible bids must be based on something other than your knowledge and experience of the product and services you want to provide. If you want to beat your competition and posture yourself for success, you need to be prepared to defend your bid.

Here is a list of acceptable support documents that you should have available before you submit your bid:

  1. Direct Labor Costs:
  • Payroll reports for current employee labor rates
  • Contingent hire agreements
  • Labor survey data (Department of Labor, Towers, ERI, others)
  1. Consultant Costs
  • Consultant’s cost proposal
  • Quotes from 3 or more consultants
  1. Travel Costs
  • Hotel and per diem – Joint Travel Regulations (JTR) for the continental United States (CONUS) or outside the continental United States (OCONUS)
  • Air fare – Quotes from travel agency, airline, or travel website
  • Rental cars – Quotes from travel agency, rental car company, or travel websites
  1. Material Costs
  • Quotes from 3 or more vendors
  • Vendor invoices for like items
  1. Other Direct Costs
  • Quotes from 3 or more vendors
  • Vendor invoices for like items
  1. Costs Related to Office or Facilities Rentals
  • Lease agreements
  • Rental broker quotes
  1. Fringe Benefits Costs and Rates
  • Annual fringe benefits budget. This budget is based on payroll tax requirements, worker’s compensation rates, company leave policy, and other company fringe benefits, including:
    • Health care and disability insurance
    • Company paid retirement expenses.
  • Historical fringe benefits costs and rates for reasonableness (for comparison)
  1. Overhead Costs and Rates
  • Annual overhead budget
  • Compare to historical overhead costs and rates for reasonableness
  1. General and Administrative (G&A) Costs and Rates
  • Annual G&A Budget
  • Compare to historical G&A costs and rates for reasonableness

Although this may seem like a long list of documents, the time and effort it takes to have them ready will pay dividends when you’re asked for them; and it could make the difference between winning the contract or not. The goal is not just submitting a bid, but submitting a defensible bid.

If you need assistance in preparing your bids or want more information about our government contract and accounting services, contact us at KDuncan & Company.

Benefits of Outsourcing Accounting

5 Benefits of Outsourcing Your Accounting    

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If you’re a small business owner who feels overwhelmed by the myriad tasks involved in keeping the books, you’re not alone. Accounting takes a lot of time and effort, but it’s time and effort well spent because every successful business relies on solid accounting information to operate smoothly on a daily basis and realize long-term growth. On the flip side, poor accounting and failure to keep good financial and business records can be devastating to a company.

Small and startup companies can benefit by outsourcing several aspects of their business, but accounting is one of the most important ones they should consider. In fact, more and more companies – approximately 40%, according to a KPMG survey – are choosing to outsource their accounting. Why? Because it makes good business sense for all the reasons listed below.

  1. Saves time

    Outsourcing your accounting is more operationally efficient because it frees you up to do what you do best; run and develop your business. If you’re spending more time on keeping your books than making money, it’s time to consider outsourcing. As Small Business Trends points out, “Small business owners need experts to keep the books straight while they make money.” Outsourcing allows your employees to use the expertise they were hired for in support of those business goals. You want to spend your time and talent wisely and focus on improving productivity and generating revenue.

  2. Saves money

    When you consider the overhead costs involved with hiring your own accountant or keeping an internal accounting department – salaries, benefits, payroll taxes, hardware and software and other supplies – outsourcing your accounting can save you a significant amount of money. Some estimates project savings of up to 62% when you outsource your accounting, especially considering businesses typically spend 2-5% of revenues to properly train and staff internal accounting departments. A professional accountant can also save you money by preventing you from making an inadvertent – but costly – financial mistake with your records or paperwork.

  3. Provides valuable expertise

    Keeping the books, maintaining records, preparing for audits, etc. requires skills and experience you may not have. This is particularly true for government contractors where financial costs incurred are the basis for pricing and billing to your federal clients. While you may be able to learn how to do your own accounting, doing so could take more time and effort than it’s worth. And mistakes in this arena can cost you your business, so it’s probably best to leave it to the experts. Not only can they do it more quickly, thoroughly, and accurately, but they also help to keep your business out of trouble with DCAA. Additionally, they have access to all the latest regulations, standards, resources, and contacts. Most small business will not have the resources to procure the guidance of an experienced GovCon CFO is you had to employ them full-time. However, procuring eight hours per month or quarter from a seasoned professional could be extremely valuable.

  4. Provides tailored accounting services

    You may just need bookkeeping or you may need a CFO, or you may something in between. Outsourcing your accounting enables you to get assistance with only those accounting tasks that you need. Thus, you avoid paying a controller to do bookkeeping.

  5. Provides objective third party perspective of processes and financial records

    This is beneficial in several ways. First, having an outsourced accountant overseeing the books and financial records can provide you an impartial view of checks and balances on your financial transactions. A third party accountant can also give you an extra set of eyes on your records to keep everything accurate. As an entity that has access to all the intimate financial details of a client, the outsourced accountant can develop a relationship with the client as a trusted objective advisor. Finally, an out-sourced accountant brings the experience and knowledge the comes from working with a myriad of business environments.

Each business must decide what is best for them depending on their situation with re-spect to outsourcing accounting or not. For all the reasons listed above, many businesses – especially small ones – decide to let the professionals take care of their ac-counting needs. Not only can it save you time and money, but ultimately it will give you peace of mind that it’s getting done correctly. And that way, you can focus on what you’re truly good at – running your business and refining your core products and services.

If you’re a small federal government contractor and need assistance with your accounting needs, contact KDuncan and Company. We offer a full range of financial accounting services. Contact us here.

KDuncan & Company is dedicated to providing knowledge and support for small government contractors about concerns regarding government contracting. For questions on areas such as as cost proposals, accounting systems, DCAA compliance, and incurred cost audits, reach out to KDuncan & Company. 

how to choose an accountant

How to Choose an Accountant: 10 Things to Look For

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If you’re a small business owner and realize that you need to outsource your accounting, the next step is to find an accountant; but what should you look for? Although there are plenty of options, it’s important to choose your accountant wisely because that individual will be an important asset to your business and help it grow. Conversely, a bad accountant could impact your business financially and even get you into legal trouble.

Two things you’ll want to think about as you start the process are: 1) what accounting tasks you need help with and 2) whether you need help on a long-term basis or on a one-time basis. Both of these considerations will affect who you choose. With this in mind, here are 10 things to look for in an accountant:

  1. Specific expertise relevant to your business

    Depending on what your business is, an accountant who has experience in your industry and understands your specific needs is extremely important in finding someone who is not just a good accountant but also a good fit for your business. In fact, The Daily MBA lists relevant industry experience as one of the top five criteria you should consider when you’re looking for an accountant and says that, “Choosing an accountant is equivalent to hiring an expert on your team.” For example, if you are an online business owner, “the ideal accountant would be is one who is working with or has had an experience working with other e-commerce businesses.” These accountants will understand the various nuances of your business and can save your business time and money, especially when it comes to taxes. Government contracting is a very unique industry and knowledge and experience of regulations, pricing, and government auditors is vital.

  2. Clarity of Needs

    It is important to be clear of your needs and requirements. Do you need the support of a CFO, senior accountant, or bookkeeper? The challenge is that as a small business the answer may be “all of the above.” But, you don’t want to pay CFO’s rates to get bookkeeping accomplished. If this is the case, you would want to seek a solution that provides a matrix of talent, experience, and billing rates.

  3. Certifications

    You probably want a certified accountant – a CPA – for several reasons. In general, CPAs are more familiar with tax laws; but more specifically, CPAs are licensed by the state and required to stay up-to-date with tax and other accounting disciplines to maintain their certification. SmallBusiness Trends points out that “the biggest reason to use a CPA for your business taxes is that a CPA is eligible to represent you before the IRS in an audit, while an accountant is not.” Particularly as your business grows and your finances become more complicated – especially related to taxes and audits – you’ll find you really need a CPA.

    Some accounting tasks, such as bookkeeping, tax preparation, and general financial management don’t need a certification. If an accountant is not certified, they should nevertheless have the credentials to show they have experience in the areas you need help with. Small Business Trends suggests using a good portal like Phlexable to check the credentials for you.

  4. Location

    Do you need your accountant to be where you are or can you work with someone in a remote location using cloud-based services? You’ll have to determine whether the location of your accountant matters to you or not. Your options for who you choose will expand if you’re comfortable using cloud-based accounting services; but if it’s important for you to have your accountant with you, you’ll be limited by location. Keep in mind that if you find someone outside your local area, you’ll need to make sure they’re experts in the tax laws that affect you and your business.

  5. Client base

    Check the client base of a prospective accountant. Are the clients similar in size and scope to your business? Has the accountant been with certain clients as they grew in size? That can give you a sense of whether the accountant can adjust to a business that grows over time. Remember, too, that an established firm with a large client base may not meet your specific needs. As Inc. points out, “Some businesses feel more comfortable employing a large, name-brand firm. But while one of the Big Four firms might seem attractive, you have to ask yourself whether a small firm will be overlooked. You also have to know what makes you comfortable as a business leader. You may feel more at ease with face time with a partner in a smaller firm.”

  6. Length of time as an accountant

    The longer someone has been working as an accountant, the more experience they likely have and the greater chance they will know the tricks of the trade to be able to do the job more effectively.

  7. Type of software accountant uses

    Finding an accountant who knows and/or uses the same software you use, is important to prevent issues over sharing data. Exporting and importing data, even if it’s possible, can be time-consuming and lead to mistakes. You also need to be careful about the security of highly sensitive financial information as you send the data back and forth. One common solution in today’s world is utilization of cloud hosting services. Here, both you and your accountant would have access to your accounting data 24/7.

  8. Recommendations and references

    The accountant you’re considering should be able to provide good recommendations and references that you can check. You may have found someone through your own network (your local chamber of commerce or business association, etc.), in which case they already come with at least one recommendation. Make sure your referrals come from a professional network or someone you trust. Once you find someone, it’s always important to verify credentials and see how well they worked with their clients, particularly clients that have a business that’s similar in size and complexity as yours.

  9. Initiative

    The best accountants are proactive and go beyond the basic accounting tasks you’ve asked of them. They not only manage your finances and complete your taxes, but they also give you recommendations on how to save money or do things more efficiently. They make the effort to learn about what your company specifically does. Forbes explains that “The right CPA goes beyond just handling your case by the numbers; he or she will be able to answer questions and thoughtfully counsel you on mindful financial planning across all areas of your business.” This is what separates a good accountant from a great accountant.

  10. Good Rapport

    This is an intangible quality that doesn’t come with a certification or any level of experience, but it speaks to how well you can work with a particular individual. Just like anyone you employ, you need to be able to get along and ideally, you should enjoy working with that person. With all the things that need to be worked out (i.e., how to communicate, what the work arrangements are) as well as the level of trust you need to have in that person (considering they handle your finances), having a strong rapport with your accountant is critical.

At some point in your business, an accountant will be a must. Taxes are not something you can afford to mess with, and accounting is way too time-consuming for business owners. When it comes to finding a good accountant, the options are numerous, ranging from large accounting firms to local mom and pop accountants. It certainly helps to know what to look for; and the key is to choose one you can trust with your finances, one who suits your needs as a government contractor, and one who has all the necessary experience, credentials and certifications to help your business succeed.

KDuncan & Company specializes in assisting small and mid-size government contractors. If you need accounting support, contact us.

KDuncan & Company is dedicated to providing knowledge and support for small government contractors about concerns regarding government contracting. For questions on areas such as as cost proposals, accounting systems, DCAA compliance, and incurred cost audits, reach out to KDuncan & Company. 

how long should you keep business tax records

How Long Should You Keep Business Tax Records?

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An important part of any business is record keeping. You should keep records about payrolls, invoices, and taxes. Not only will these records keep you in compliance with the law, but will also help you understand your business’ financial health.

A large amount of paperwork is accumulated each year, and it can be difficult to determine how long you should keep this information. When determining how long you should keep records, you first should consider the type of information you’re looking at. The IRS has given businesses specific guidelines for particular pieces of information, such as how long you should keep business tax records. You want to make sure the relevant information is available if your business is audited.

For laws that apply to your specific business, you need to consultant an accountant, but here are some general guidelines:

Tax returns

Businesses file quarterly taxes with the federal and state government. You also file a tax return each year. The IRS recommends that you keep tax records for three years from the date you file. If you file a claim for credit or refund after you file your return, you should keep the returns for two years from the date you paid the tax. Always file for your tax return. If you never file, or if you commit an act of deliberate fraud, there is no statute of limitations.

State Rules

Each state has specific rules about keeping tax returns. In Virginia, for example, the law says you need to keep tax returns for at least three years from the date of the return or the date the return was filed. The same law applies in Maryland. It’s best to check with your accountant on the rules that apply in your state.

Employment Tax Records

If you have employees, you have to keep track of records pertaining to them. These records include things like:

  • Employer identification number
  • Wages, annuities, and pension payments
  • Amounts of tips reported
  • Names, addresses, and social security numbers
  • Copies of Form W-2 that were returned to you as undeliverable
  • Copies of employees’ and recipients’ income tax withholding allowance certificates
  • Copies of returns filed

The IRS recommends keeping employment tax records for at least four years after the date that the tax becomes due or is paid. However, the IRS can go after payroll taxes indefinitely. In Beeler v. Commissioner, the IRS was able to receive payment for outstanding payroll taxes after 24 years.

Personnel Files

Along with tax information, you must also keep an I-9 and other personnel records. The I-9 form verifies that a person is legally allowed to work in the United States. Records must be kept for a year after an employee leaves or three years from the start of employment, whichever is greater. Many attorneys and human resource professionals recommend keeping personnel files for seven years.

Supporting Evidence

While the three-year rule generally applies, the IRS can seek to recover unpaid taxes for up to six years if you failed to pay an amount greater than 25% of your business’s gross income. It’s wise to keep receipts, bank statements, invoices, and other supporting documents for seven years.

Healthcare Information

The Affordable Care Act brought new tax implications to many businesses. Businesses with more than 100 employees are required to show proof of insurance with their tax returns or pay a penalty. The IRS recommends keeping these records for three years from the time of filing.

Records Connected to Property

The IRS guidelines for property states “keep records relating to property until the period of limitations expires for the year in which you dispose of the property.” You need property records for depreciation, amortization or depletion deduction. You will also need to calculate gains or loss when you sell the property.

Insurance Records

Businesses can have various types of insurance — property, workman’s comp, product liability and others. It’s best to keep these records for four years. If you manufacture a product, it’s best to hang on to these records indefinitely, as you never know when a lawsuit will be filed. Four years is a good guideline for other insurance records.

Capital Assets

If you have capital assets – stocks and bonds, real estate, etc. – and you sell them some day, you should retain proof of how much you paid for it to establish your cost basis.

When it comes to record keeping, the philosophy is definitely “better safe than sorry.” If you’re not sure how long to keep a business tax record, it’s better to file it away in a secure place than destroy it, only to find out that you need it later.

For more on record keeping or if you have any questions, feel free to contact us.

KDuncan & Company is dedicated to providing knowledge and support for small government contractors about concerns regarding government contracting. For questions on areas such as as cost proposals, accounting systems, DCAA compliance, and incurred cost audits, reach out to KDuncan & Company.