Advertising and Public Relations Costs

Advertising and Public Relations Costs

Advertising and Public Relations Costs

The investment in advertising and public relations costs is one many business owners are willing to make. These costs often provide a return on investment, ultimately helping to grow your business. As a government contractor though, these costs can cause quite the headache. The classification of Advertising and public relations costs can be tricky for government contractors. Knowing the distinction between allowable and unallowable costs can help you remain compliant, while reaping many benefits.

Advertising is ‘the use of media to promote the sale of products or services.’ Examples of advertising media are magazines, newspapers, conventions, and direct mail. Public relations are ‘all functions and activities dedicated to maintaining, protecting, and enhancing the company image or maintaining or promoting favorable relations with the public.’ Public relations include activities that relate to advertising and customer relations. Advertising and public relations costs include:

  • Costs of media time and space
  • Purchase of services outside organizations perform
  • Applicable portion of salaries, travel and fringe benefits of employees that engage in the functions and activities that FAR 31.205-1 identifies.

Allowability of Advertising and Public Relations Costs

When determining the allowability of advertising and public relations costs a basic rule of thumb exists. If these costs relate to benefiting the government, then they are most likely allowable. If not, they are unallowable. Government contractors often take a conservative approach to these costs and classify them as unallowable. However, in doing this they take the chance of not recouping the costs from the government.

The Federal Acquisition Regulation (FAR) sets specific guidelines to determine the allowability of these costs. Advertising costs are allowable only if FAR 31.205-1(d) indicates they are. Allowable advertising costs include:

  • Costs that arise from requirements of government contracts
  • Costs to promote sales of products normally sold to the U.S. government
  • Costs that are allowable in accordance with FAR 31.205-34

The guidelines for allowable public relations costs include that they must be a requirement for contracts. Also, there are other guidelines for these costs to be allowable that FAR 31.205-1(e) addresses. Examples of allowable public relations costs are:

  • Responding to inquiries about a company’s policies
  • Communicating with the public
  • Costs of participation in community service activities such as blood bank drives and disaster assistance.

Unallowable Advertising and Public Relations Costs

These costs can, however, also be unallowable. FAR 31.205-1(f) provides guidance for the determination of unallowable costs. If a cost does not meet the requirements above, then it is unallowable. Some common examples of these unallowable costs are:

  • Events that do not focus on the promotion of sales to the government
  • Costs of corporate celebrations
  • Cost of promotional material

Understanding the aspects of advertising and public relation costs is imperative as a government contractor. These costs can be tricky for government contractors. The misclassification of them can negatively impact your business. Having a team of experts to provide you with guidance can help ‘tackle’ this challenging subject.

 

Originally written by Jamie M. Shryock, CPA

Updated and additional content provided by Elizabeth Partlow

5 Reasons to Outsource Your Accounting

5 Reasons to Outsource Your Accounting

5 Reasons to Outsource Your Accounting

As a business owner, working long hours is something you are all too familiar with. You are responsible for managing the day-to-day activities, while simultaneously growing your business. You feel there are just not enough hours in the day to complete your ‘to do list.’ Often wishing for a solution where you can do it all. The great thing is, there is a way to accomplish this. When you outsource you accounting services, you ease the stressors of ‘doing it all.’ Plus, your dream is to be a business owner, not an accountant.

The thought of outsourcing any business process may have your ‘wheels spinning.’ How can this help to solve your problems? Outsourcing provides many benefits, ultimately aiding in the success of your business.

Cost Savings

Having an inhouse accountant, bookkeeper, or even an accounting team is a significant expense to your business. You are responsible not only for an employee’s pay, but also everything that goes along with it. This includes things like payroll taxes, paid time off, and other benefits. When outsourcing accounting services, you are paying only for the services you desire. It reduces your business’ costs and helps to increase its profitability.

Expertise

Accountants specialize it just that, accounting. When you outsource accounting, you get access to a team of experts. We constantly are improving our skills and keeping up with the industry standards. Understanding the ever-changing laws and regulations to help keep you compliant. Having the right team of experts is vital to the success of your business. Outsourcing also allows you to tailor your accounting services to your needs.

Focus on Growing

Business owners get caught up in the daily minutia of a business, rather than growing it. When you outsource accounting though, this changes. The time you desperately were looking for, now exists. This gives you and your team the opportunity to focus on setting and achieving goals. As this occurs, you have continuous access to an accounting team. Giving you the ability to expand your accounting services as your business grows.

Minimize Time and Resources for Recruiting

Recruiting is a time-consuming task. You spend countless hours going through the process of creating a job post, reviewing resumes, and performing interviews. Only to risk being left with mediocre candidates, or someone who lasts for six months. Then the long and exhausting process starts all over. Outsourcing your accounting eliminates the expense and tedious process of trying to find the perfect candidate.

Smarter Business Decisions

Outsourcing accounting services provides a fresh outlook on your financial data. This gives you an opportunity to finally have a proactive business strategy, versus a reactive one. Analyzing your business’ financial information from a bird’s eye view allows accountants to evaluate the financial health of your company. They can provide you with impartial advice, which can help you achieve your business’ goals.

 

There are many benefits to outsourcing your accounting services. It reduces costs, provides expertise, promotes growth, and much more. Our team knows your pain points as a business owner and is here to help!

 

Contributed by Elizabeth Partlow