Do you need to maintain "Cost Accounting Standards?"

When I received my first sub-contract with a large prime (Leidos), there was a section in the paperwork that asked whether I met Cost Accounting Standards (CAS), and if not, to provide a reason why I didn't.

I was nervous about because a) I didn't know what that was and b) I just used a spreadsheet.

After doing some research, I realized that like most things for solo 1099s, the correct respones was a big fat "N/A" on the paperwork.

There are a few reasons for this:

• On a Time and Materials (T&M) contract, they are mostly irrelevant because you only bill for your labor, not for other costs
• CAS are generally required for larger contracts (think multi-million dollar contracts)
• Small businesses are generally exempt from the requirement
• If you are sub-contracting, the prime will meet CAS and you'll be covered under their umbrella

The whole idea of the CAS is that the government wants to be able to audit your books and time-keeping procedures to prevent and catch fraud. As a solo 1099, there isn't much to audit and you are small potatoes.

So, don't go out and try to get an accountant. Just write N/A and call it a day.

Want the full playbook? Check out Going 1099.