Nobody likes tax season - even unprofitable startups have to file returns. And that means paperwork, competent financials…time startup CEOs could be spending growing their business.

Thankfully, a little preparation at the end of the year can make your taxes less painful. Having helped prepare thousands of returns for venture capital-funded startups, I’ve compiled 10 tips to help make taxes a bit easier for founders.

  1. Review your Financials.  Answer any open questions.  Clean up Uncategorized Expenses.  If your bookkeeper or Controller had ANY open questions for you in 2019, address them now. Don’t wait until Q1 of the next year; just get it done! You are going to have a ton of real work to do in January, so get your financials ready for a clean yearly close.
  2. Get your Sales-by-State Revenue Reports ready.  Your tax accountant needs this for apportionment, so that your state returns can be done correctly.
  3. Confirm which filings your Preparer will handle next year. We have tax deadlines listed on our site here for Delaware C Corps, as well as individual deadlines for startups in cities like San Francisco or New York.
  4. Confirm your Vital Stats with your Tax Preparer. Your business might have moved, changed its fiscal year, or changed its name.  Confirm all these vitals with your tax preparer.
  5. Get W9s from your Contractors.
  6. Get W8 BENs from International Contractors.
  7. Get ready for Research and Development Tax Credits.  Be prepared to estimate and support with documentation how much time your engineers spent on new R&D efforts. Don’t know what this is? Unprofitable startups can often cut their burn rate by getting an R&D credit study done - by up to $250,000 a year! That’s a massive cash burn reduction. Our online R&D Tax Credits calculator can help you find out how much money you can save.
  8. Have your employees confirm their vital stats with a payroll provider.  People change names, move, etc.
  9. Get your foreign subs’ financials ready. Your preparer will need them to report 5471 on your 1120 tax return.  Give your international accountant a heads up now.
  10. And Watch out for FBAR.  If you have overseas bank accounts, you’ll need to report this.  Penalties are big if it’s missed.

You can make your tax season even easier by working with an expert like my team at Kruze Consulting! We only work with venture capital and seed-funded startups. Contact us today, or learn more about our competitive tax pricing here.