Startup companies use a variety of accounting software to keep track of their books. But one thing that all startups have in common is the need to get their annual taxes done. That’s right, even unprofitable technology startups need to file taxes annually. How should a startup do their taxes? We recommend hiring an experienced tax CPA who knows how to work with startups, since unprofitable, venture capital funded businesses are a different breed than the average small business.

Learn about Kruze Consulting’s startup tax practice here.

The first step to getting your startup’s taxes done is to get the right files put together for your CPA. Let’s review the standard documents that you need to get your startup taxes done.

Which documents do you need to get your startup’s taxes done?

  • IRS Employer Identification Number letter
  • Basic Business Information
    • Business Address
    • Shareholder SSN/Address info
  • Existing Tax Documents
    • Prior Year Tax Returns (Federal and States)
    • Local Tax Returns (if any)
  • Financial Statements
    • Full year Balance Sheet
    • Full year Profit & Loss Statement (Income Statement)
    • Full year General Ledger
    • Capitalization Table

Advice for different accounting platforms.

Some of the information your CPA will need to complete the annual tax returns will be found in your accounting system. Below are the steps that you’ll need to take to get the information out of your accounting software and into your CPA’s hands so they can file your return.

How to Get Your Startup Taxes Done in QuickBooks

When you are looking to get your annual taxes done, and your accounting software is QuickBooks, you’ll need to export the following documents:

  • Full year Balance Sheet
  • Full year Profit & Loss Statement (Income Statement)
  • Full year General Ledger

It’s important to note that if you are on are on a Calendar Year schedule, that you will need to export the QuickBook statements from January 1st through December 31st. If you are on a Fiscal Year schedule, you’ll need to export the statements from the 1st day of the Fiscal year, through the last.

Remember that you will need to go from January 1st to December 31st - capture the entire period.

QuickBooks is the accounting software that we typically recommend for our startup clients, for a variety of reasons - including how easy it is to download financial statements. To get the statements that you need for your startup’s annual taxes, in QuickBooks:

  1. Click Reports>Standard>Profit & Loss
  2. Click on Customize Report and change the date range to your Fiscal / Calendar year.
  3. To export to Excel from QuickBooks, hover over the icon in the top right with the arrow pointing to the right and click>Export to Excel
  4. Repeat the process for the Balance Sheet and General Ledger
  5. Remember to put your company’s name on the Excel file, so that your CPA can correctly associate the documents with your company!

How to Get Your Startup Taxes Done in Xero

If your startup is using Xero, you’ll need to export your financials so that your CPA can prepare your tax return. Once again, you’ll want to get the following financials from your Xero system:

  • Full year Balance Sheet
  • Full year Profit & Loss Statement (Income Statement)
  • Full year General Ledger

Here is how you get the financial statements out of Xero for your CPA to do your taxes:

  1. Navigate to Accounting on the top banner in Xero
  2. Select Reports
  3. Select the NEW Income Statement Report (this is also known as a “profit and loss” report
  4. Pick the date range - remember to get the entire year
  5. Hit “Update”
  6. Click “Export” at the bottom of the report, and export to Excel
  7. Repeat the process for the Balance Sheet
  8. To get the General Ledger in Xero (Here is the Xero how to on getting the GL)
  9. In the Accounting menu click Report
  10. Click General Ledger
  11. Select a time period, then click “Update”
  12. Click Export detailed General Ledger to Excel from Xero
  13. Remember to put your business’s name on the Excel file, so that your CPA can correctly associate the documents with your company!

Xero is a good cloud account solution for small businesses and startups, and it makes it very easy to download the documents that you’ll need to get your taxes done.

How to Get Your Startup Taxes Done in Wave Accounting

While not as popular as other accounting softwares, a number of startups do use Wave’s accounting software. When you are using Wave and need to get your startup’s annual taxes done, here is how you get the information for your CPA out of Wave.

You’ll need to create the following files for your CPA out of Wave:

  • Full year Balance Sheet
  • Full year Profit & Loss Statement (Income Statement)
  • Full year General Ledger

Export these documents from Wave by:

  1. Click the “Reports” tab on the left
  2. Select the Profit and Loss
  3. Select the date range
  4. Click Update
  5. Click Excel to export the Profit and Loss out of Wave and into Microsoft Excel
  6. Click the “Reports” tab again
  7. Select the Balance Sheet
  8. Select the date range
  9. Click Update
  10. Click Excel to export the Balance Sheet out of Wave and into Microsoft Excel
  11. Repeat the process in the Reports tab to export your General Ledger
  12. Remember to name the file with your company’s name so that your CPA can easily keep track of the files

How to Get Your Startup Taxes Done via inDinero

We do occasionally see startups using inDinero’s accounting software, so here is how to get your taxes done if inDinero is your startup’s accounting system.

Your CPA will need the following financial statements and files out of inDinero so they can do your startup’s taxes:

  • Full year Balance Sheet
  • Full year Profit & Loss Statement (Income Statement)
  • Full year General Ledger

Export these statements out of inDinero by:

  1. First, get the P&L by putting your mouse over “Reports” in the left navigation and choose “Profit & Loss”
  2. Select the date range - remember to get the entire year for which you are doing your taxes
  3. You may need to select “Update” to refresh the view
  4. Export the Profit and Loss out of inDinero by clicking “Export” in the top right of the screen. Choose Excel to export from inDinero to Microsoft Excel
  5. To get the Balance Sheet out of inDinero, hover over “Reports” in the left navigation, then select “Balance Sheet”
  6. Select the date range
  7. Click “Update”
  8. To download the Balance Sheet out of inDinero, click on “Export,” which is in the top right corner near the gear icon, and select Excel
  9. Next, to export the General Ledger out of inDinero, select “Tools” from the left navigation, then choose “General Ledger”
  10. Make sure you have selected the entire time frame in the date range, and click “Update” if necessary
  11. To download the General Ledger out of inDinero, click on “Export” in the top right, and select “Excel” to export the GL from inDinero to Microsoft Excel
  12. Remember to name the file with your company’s name so that your CPA can easily keep track of the files

That’s how you get the files your CPA will need to complete your taxes out of inDinero!

How to Get Your Startup Taxes Done in Bench

While Bench (also known as Bench.co) is more of a small business focused accounting software, some startups do use it and will need to know how to get their taxes done. So, here is how you get your taxes done using Bench if you are a funded company.

You’ll need to create the following files for your CPA using Bench’s accounting software:

  • Full year Balance Sheet
  • Full year Profit & Loss Statement (Bench calls this the Income Statement)
  • Full year General Ledger

Download the files out of Bench by following these steps:

  1. Click on “Report” on the left side of the screen after you log into Bench
  2. Choose “Income Statement” on the top of the screen
  3. Select the date range - make sure you’ve got the entire period
  4. To export the Income Statement out of Bench, choose “Download,” which is in the top right of the screen, and select Excel
  5. To download the Balance Sheet out of Bench, click on “Report” on the left side of the screen
  6. Click “Balance Sheet” on the top of the screen
  7. Select the date range
  8. To export the Balance Sheet out of Bench, choose “Download,” which is in the top right of the screen, and select Excel
  9. Repeat the process for the Balance Sheet
  10. To access the General Ledger in Bench, click on General Ledger
  11. Select the date range
  12. Then choose “Download” in the top right to export to Excel

That is how you can get the data you need to do your startup’s annual taxes when you are using QuickBooks, Xero, Wave, inDinero and Bench!

Kruze Consulting provides low-cost tax returns, and only works with venture capital and seed funded corporations. If you are a funded startup, reach out to Kruze to see if a low-cost tax return is a good idea for your company!

 
Disclaimer: The information on this page intended as general guidance for startups and it doesn’t substitute the need to work with a professional. It’s also a high-level overview and is in no way complete. Your company is unique, so consult a CPA.