Startup Law: When do I need to submit my company's first tax return?

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Kruze Consulting Startup Q&A Author
Vanessa Kruze Founder, CPA

Most folks only think about the annual Form 1120 Tax return, but there’s actually a ton of taxes and tax deadlines for Delaware C-Corps.

Keep in mind that bootstrapped/pre-revenue/ just expenses startups must pay taxes. You might not be subject to Income Taxes (which are based on profitability) but you will still be subject to a wide variety of other taxes which aren’t always connected to Revenue.

Startup Law- When do I need to submit my company's first tax return

To start, here are 4 Startup Tax Calendars, based on metro:

Quick caveat though, these startup tax checklists aren’t complete. There are actually a bunch of taxes out there, some of which may or may not apply to you (depending on your unique circumstances, of course). Here’s a list of just some of the different types of taxes out there that you may need to consider:

  • Income Tax: this type of tax is what most people think of when they hear taxes. It’s taxes based on your Net Income, or profit. (Filed once per year, most startups file on 4/15)
  • Gross Receipts Tax: some cities, like San Francisco, will tax your Gross Revenue. (SF requires you to make quarterly payments.)
  • Franchise Tax: this type of tax is imposed on businesses who just…exist. Yes, for the pleasure of existing, you will be asked to pay a tax. There’s often a minimum fee, and most times it has nothing to do with whether you’ve generated income. The most common type of Franchise Tax for venture backed startups is DE Franchise Tax, which runs $400+ every year. (DE requires you to make quarterly payments if you will owe $5K+.)
  • Payroll Tax: if you have employees, you have payroll tax. Be sure to use a payroll provider like Gusto to help you pay the right taxes at the right time, and file all the requisite forms (like the 941s). (Your payroll provider will submit taxes after every payroll and report tax quarterly on a 941.)
  • Sales Tax: if you tangible goods (eg clothes, furniture, widgets, stuff you can hold in your hand), you’ll need to register, pay, and file sales tax. Use Avalara, because like payroll tax, it can get super crazy very quickly. (The more you owe, the more frequently you file, eg monthly vs quarterly)
  • SaaS Tax: see more here
  • Property Tax: if you have significant property holdings, whether that be land, or even just computers/tables/chairs, you might be subject to property taxes. This type of filing is frequently known as a “571-L.” (Usually filed once per year around March - June)
  • Foreign Tax: if you have a foreign subsidiary or parent company, you might be subject to withholding tax, or FBAR/5471/5472 reporting. Be sure to get this one right; the penalties for getting it wrong can be $10K+. (Usually filed on 4/15)

A very common misconception is that the CPA or firm that filed your annual tax return (the 1120) will have taken care of all these types of taxes: that is never the case!! It is always the CEO’s responsibility to make sure that these taxes are addressed and paid on time. Granted, a CEO can only know so much… and the CPA can only guess as to which types of taxes a company might be subject to. Hence, it’s really important to sit down with a CPA to make sure that all bases are covered based on your company’s unique situation.

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