---
title: How to sort SBIR and STTR costs | Tenax Accounting
description: How to sort costs on SBIR and STTR awards into direct R&D, fringe, indirect overhead, indirect general admin, and unallowable. Free one-page download from Tenax Accounting.
---

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# How to sort SBIR and STTR costs

For med device and life sciences founders with an SBIR or STTR award. Which bucket each cost belongs in, and what to set up before the first invoice.

[Download light ↓](https://tenaxaccounting.com/hubfs/tenax-sbir-sttr-costs-light.png)[Download dark ↓](https://tenaxaccounting.com/hubfs/tenax-sbir-sttr-costs-dark.png)

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![How to sort SBIR and STTR costs. Five cost rows, each with a status and a short note: direct research and development, fringe, indirect overhead, indirect general admin, and unallowable. Tenax Accounting](https://tenaxaccounting.com/hs-fs/hubfs/tenax-sbir-sttr-costs-light.png?width=1600&height=1215&name=tenax-sbir-sttr-costs-light.png)

## The short version

**Direct R&D:** charged 100 percent to the award, only to the award. Track hours by project, every day.

**Fringe:** payroll taxes, health insurance, and paid time off. Pooled at one rate for all labor.

**Indirect overhead:** rent, utilities, and lab tools. Its own pool. Never billed twice.

**Indirect general admin:** executive pay, bookkeeping, and insurance. Its own pool. Commercial growth spending stays off the award.

**Unallowable:** interest, entertainment, and marketing. Some patent costs are allowed under agency rules.

## Questions

What is SBIR and STTR?+

Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) are known as America's Seed Fund. They are federal programs that fund research at small businesses.

Does STTR require a research partner?+

Yes, STTR requires a research partner, such as a university. The partner must contribute at least 30%, but not more than 60% of the effort.

How is overhead different from general admin?+

Overhead is the cost of the space and tools where research happens. General admin is the cost of running the company, like executive pay and insurance.

Why do costs need to be separated in the books?+

Agencies pay for research by category, and each has its own rules. When the books can't show where each dollar went, a claim can be questioned or turned down.

## Not sure where a cost belongs?

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