Biotech and Life Sciences

Accounting for biotech companies with complex R&D finances

Clinical trials, research grants, equity compensation, and investor due diligence all require accounting expertise that goes beyond standard practice. We have worked with biotech companies at every stage.

What We Handle

Biotech-specific accounting and reporting

Biotech accounting has distinct requirements that general accountants are often unfamiliar with , grant revenue recognition, clinical trial accruals, and R&D cost tracking all need to be handled correctly from the start.

R&D expense tracking and capitalization analysis
SBIR and STTR grant accounting and reporting
Clinical trial cost accruals and CRO contract management
Grant revenue recognition under ASC 958 and government cost principles
R&D tax credits for qualified research activities
Equity compensation under ASC 718 including complex vesting schedules
Investor-ready financial statements for fundraising rounds
Audit preparation for NIH-funded and VC-backed companies

SBIR/STTRR&D CreditsGrant Accounting Clinical TrialsASC 718

R&D tax credits for biotech

Biotech companies often qualify for substantial federal R&D tax credits based on qualified research expenses including salaries for research personnel, laboratory supplies, and contract research costs.

Early-stage companies with no tax liability can in some cases apply the R&D credit against payroll taxes, providing real cash value even before profitability.

SBIR and STTR grant accounting

Government grants come with specific accounting and reporting requirements. Revenue recognition timing, allowable cost rules, and periodic financial reporting to the granting agency all need careful handling. Non-compliance can affect future grant eligibility.

FAQ

Biotech Accounting Questions

How do we account for NIH or NSF grant funding?

Federal grants are generally recognized as revenue or contribution income as allowable costs are incurred, not when cash is received. The specific treatment depends on whether the grant has conditions attached and whether your entity is a for-profit or nonprofit. We help set up the right structure from the first award.

Can we take the R&D credit on top of a SBIR grant?

Partially. R&D expenses funded by a SBIR grant are generally not eligible for the R&D credit because they are not funded with private capital. However, internally funded research activities, salary costs not covered by the grant, and other qualified expenses may still qualify. The analysis is fact-specific.

How do we accrue for clinical trial expenses?

Clinical trial accruals are based on estimated patient enrollment, trial milestones, and CRO billing schedules. We work with your clinical operations team to build accrual models that reflect actual trial progress, which is important for accurate period-end financials and investor reporting.

What financials do investors expect at the Series A stage?

GAAP-compliant financial statements, a clear R&D expense breakdown, capitalization table reconciliation, and grant funding history. Investors doing diligence on a biotech also typically want to see how burn rate maps to clinical milestones and how long the current runway extends.

Working in biotech or life sciences?

Schedule a free consultation to discuss your specific accounting needs and where your current setup may have gaps.

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