Small businesses often view federal audits with fear and trepidation. The thought of having their financial records scrutinized by government officials can be daunting. However, it is important for small business owners to understand that federal audits are not always something to be feared. In fact, they can provide several benefits and opportunities for growth.
Firstly, federal audits help ensure compliance with tax laws and regulations. By thoroughly reviewing a small business’s financial records, the audit process helps identify any potential errors or discrepancies that may have occurred unintentionally. This allows small businesses to rectify any mistakes and avoid future penalties or legal issues.
Secondly, federal audits can actually improve a small business’s reputation and credibility. When customers or potential investors see that a business has successfully undergone a federal audit without any major issues, it instills confidence in the company’s financial stability and transparency.
Furthermore, federal audits can also serve as an opportunity for small businesses to identify areas of improvement in their financial management processes. By closely examining their records during an audit, business owners may uncover inefficiencies or areas where they can optimize their operations for better profitability.
Lastly, going through a federal audit demonstrates a commitment to ethical practices and compliance within the industry. It shows that the business is operating with integrity and adhering to all applicable laws and regulations.
In conclusion, rather than fearing federal audits, small businesses should embrace them as an opportunity for growth and improvement. By ensuring compliance, enhancing credibility, identifying areas of improvement, and demonstrating ethical practices – these audits can ultimately contribute to the long-term success of a small business.
Surprise Audits
Government audits can occur without any type of advance notice. Therefore, contractors must always be prepared to receive a solid evaluation.
A surprise audit that reports non-compliance with federal accounting regulations can have negative consequences, including contract termination, and payments can be withheld unless improvements are in place. In addition, this can be very time-consuming and stressful.
Keeping Ahead of Technological Innovations
Keeping pace with stringent government accounting policies allows a company to truly understand governmental purposes, needs, and more extensive processes and then use that knowledge to manage and methodically grow the company. Luckily today, many cutting-edge technologies can take the pressure off by making even the most complex accounting procedures quite simple. These innovations help a contractor comply with government requirements, permitting employment of systems for management and growth while adapting to keep in step with ever-incoming changes in conditions. Also, having a solid accounting system will only improve your company in the long run.
Rules Of Timekeeping And Accounting
Government contractors have to maintain rigorous schedules when compared to the private sector. Therefore, your business must comply with a set standard of rules and regulations when reporting on how many hours worked in a certain period.
The Financial Accounting Standards Board (FASB) states that contractors must comply with the following to work with the government:
- Federal Acquisition Regulations (FAR)
- Cost Accounting Standards
- FAR agency supplements
Simplified Procedures
In 1994 the Federal Acquisition Act FASA simplified the buying procedures of the government.
Many of the more harsh restrictions on government purchases were removed for any purchase less than $100,000. Now agencies use much simpler procedures for analyzing and soliciting bids up to $100,000. However, the government must still advertise all purchases over $25,000 at www.fbo.gov.
Make Use Of Government-Provided Free Tools.
You can identify contracting opportunities online by utilizing tools such as this forecasting tool that lets you see what opportunities are available. You can study the government contracts that are a couple of years old to see what requirements are needed to win the job. This puts you in an excellent position to have all your research completed when the contract is about to expire and you put in your proposal.
Do Not Give Up!
At some point, the process can be a little overwhelming. You must keep in mind that the reward will be worth all the effort. According to the American Express OPEN survey, 57% of businesses said their revenue has grown significantly because of government contracting, and at an average rate of 61%. However, business owners should keep in mind there is no secret formula for securing a contract. The United States government is a very lucrative client for any small business.
The Government Wants Small Businesses To Succeed
In many markets, small businesses are often outcompeted by larger organizations that often have access to almost unlimited resources. This set aside actually might increase a small business’s chances of winning a lucrative bid.
The federal government is required to set aside at least 23 percent of its total spending specifically for small businesses. Several small businesses have made a fortune just on federal government contract awards.
Make Sure You Have Your CAGE Code (Commercial and Government Entity)
This code is five characters and unique to your business. It’s your ID code, and government agencies will identify your business using this code. It is a bit like a social security number for your business. If your business includes more than one facility, then you will need multiple CAGE codes. Each location must have its own unique code, and each location must be registered separately with SAM.
SAM Directory Can Help
Remember, registering for the SAM directory gives a business automatic entry into the extremely lucrative marketplace of the federal government. It is also a crucial step for applying for rewarding government grants that can help your business reach its full potential. Let us, the professionals at SAM Directory, make sure that you do all that is needed to not miss out on this important opportunity. We will make certain that your application is processed quickly and efficiently so you can start being a federal contractor as soon as possible. We remove this hassle so you can go about the important mission of running your company. Stay tuned for the next article in this series.