If a company receives more than 1 SBIR, and the company used two different indirect rates (perhaps to squeeze into budget limit) for both grants, then how would Indirects be distributed between both grants?
An example scenario: how would Rent of $1000 be distributed between Grant 1 ($300K @ 20% indirect rate) and Grant 2($300K @30% indirect rate) ? Would the $1000 Rent be distributed –
1) in proportion to the Grant amounts – therefore equally $500 & $500
2) in proporation to the indirect rates – therefore $400 & $600 in Grant 1 & 2, respectively?
Good question! Indirect costs are not “allocated”; they should be treated as overhead and put into a pool to cover the company’s general and administrative expenses. Rent can be either a direct or indirect expense. If treated as a direct cost, you would need to determine the portion of the total space needed for each project and split the costs. If treated as an indirect cost (which is more common), you can just pay from the indirect pool. A professional accounting and compliance (A/C) team can help you set up a financial system and provide ongoing bookkeeping, accounting, and financial reporting. To know more about the A/C services EGC provides, please visit https://www.evagarland.com/services/accounting/ or schedule a consultation with us at the bottom of that page. As always, please feel free to reach out if you have additional questions. -Lu