How do I file a corporate startup tax return?
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I’m a CPA, Deloitte Tax alum, my team prepares hundreds of startup tax returns a year. If you are a startup, definitely consult with a CPA or EA who specializes in startup taxation, for a few reasons:
- **NOLs (Net Operating Losses). ** As a startup, you’re probably running at a loss for the first few years. You’ll want to make sure that these are properly accounted for so that you can use these “credits” when you’re rolling in profits in future years.
- R&D credits. If you’re spending time and money on innovation (definition of startup), you want to make sure that you can get extra deductions. This goes back to point 1. Traditional accountants tend to glaze over the R&D forms unless prompted. You may also be eligible for R&D Tax Credits, that can help you lower your payroll taxes. Quickly estimate your R&D Tax Credits using our online calculator here.
- Local Tax Compliance. There’s a number of little checkpoints that must be met throughout the year. If miss them you could see BIG fines and impassable roadblocks to future financing rounds.
- Other tax credits. The list of possible tax credits is long - and even longer if you are based in particular states or in specific industries (like AgTech or CleanTech). So you should work with a preparer who knows early-stage companies so you don’t miss out on possible savings. However, it does make sense to temper your enthusiasm, as most incentives are designed for companies making a profit, so the typical, early-stage company is unlikely to be eligible for most of these. But it’s a good idea to ask, since the possible savings are large if you get the right credit or incentive!
I realize that taxation is boring… but it’s also critical to your life and your startup’s well being. Find a partner that you trust. I’m here to help.
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