Meet Tax Deadlines
In addition to using the best software tools to run your business, we want to make sure you’re keeping on top of taxes.
Here’s how to not miss important tax deadlines.
Tips to help your startup get through tax season
A new year means your startup has new goals and new business objectives. It also means you’ll need to deal with your tax obligations, so you can get back to the business of running your company. Generally speaking, if your startup was open at any point during the previous year, regardless of whether or not you were profitable, you’ll probably need to file taxes. To help with the process, we’ve got some tax tips you can follow.
Do you need an accountant?
There isn’t any firm rule about when you need an accountant to help you with your startup’s tax filings. It depends on the nature of your startup, your stage of growth, your personal skills with your company finances, and, most importantly, the amount of time and resources you have. But if you’re pressed for time and uncertain about your tax filings, the answer is probably “yes.” Corporate taxes involve a lot of details and deadlines, which we’re going to cover in more detail. If you find any of this unfamiliar or confusing, talk to an accountant.
What tax returns will you need to file?
Please remember that even an unprofitable startup must file tax returns. You may not need to pay income taxes if you’re not earning a profit, but you still need to provide a return to the IRS. Most startups are Delaware C corporations, which means you’ll need to file at least two returns:
- Your US federal income tax
- The Delaware state franchise tax
Your startup may also need to file taxes in some states. Different states have different tax rules, but if you’ve established a tax nexus in a state, you’ll need to file a return with that state. Business operations that create nexus include:
- A physical presence in a state, such as an office, store, or even a warehouse.
- Employees that are based in a state (even just one!).
- A certain amount of economic activity or income in a state, even if your startup doesn’t have a physical presence there.
States have different monetary and transaction threshold levels that establish nexus, and you can check our map of state tax thresholds to see if you may have tax obligations in a particular state.
What will you need to file your taxes?
You won’t be able to file your taxes until you’ve closed your books and finalized your financial statements. The documentation you’ll need gets more complex as your startup grows, but the information you’ll need includes:
- Employer identification number (EIN). Also called a Federal Tax Identification Number, your EIN identifies your business.
- General ledger. This is what we mean when we say “books”; your general ledger is a list of all your startup’s transactions with supporting documentation.
- Balance sheet. Your balance sheet lists all your assets and liabilities at the start and end of the tax year.
- Income statement. Your income statement, or profit and loss (P&L) statement, summarizes your revenue, expenses, and income (or loss) for the year.
- Company ownership. You’ll need your capitalization table, which should identify all the individual shareholders and percentages of ownership for your startup – make sure the information is current.
You may need other documents as well. You can find a more comprehensive list on our Startup Taxes page, but remember that other documentation may be required based on your startup’s industry and financial situation..
When do you need to file?
You should plan ahead to meet your tax deadlines. To help with that, check out our 2025 Startup Tax Compliance Calendar. We’ve listed the important tax dates for C-Corp startups. You can also find tax calendar information for major startup hubs which include state and local deadlines. You can download the dates to your calendar for free – so you won’t miss any filing dates!
How can I reduce my taxes?
This will depend on your startup, the type of business it is, whether you’re generating revenue, and many other factors. The two main types of tax breaks are tax deductions and tax credits. While both reduce your startup’s taxes, they work in different ways. A tax deduction reduces the amount of your income that the government will tax. So if your startup isn’t generating income, tax deductions aren’t as helpful.
Tax credits, however, reduce the amount of a tax that your startup has to pay. Tax credits aren’t calculated as a percentage of income, so that makes them more useful to early-stage companies that aren’t yet profitable. Offered at both the federal and state level, tax credits encourage businesses to engage in specific activities, such as research and development, investing in energy-efficient technologies, or hiring certain disadvantaged employees. There are quite a few tax credits available, but they don’t apply to every startup.
One of the biggest tax credits is the Research and Development (R&D) Tax Credit, which lets businesses that engage in specific research activities reduce their payroll taxes by up to $500,000. Using the R&D Tax Credit, our clients saved an average of about $75,000 in payroll taxes in 2022. You’ll need to prove that you are improving existing products, designing new software, or enhancing existing processes to claim the credit. You can use our R&D Tax Calculator to estimate how much you might save.
Calculate R&D Tax Credit for Your Startup
Unprofitable startups can reduce their burn rate up to $250,000 per year with an R&D tax credit study - $500,000 for the tax year 2023. Take advantage of the startup incentives set in place by the US government and help your startup reduce your payroll tax burden!
Your startup has to carefully document its qualified research and development activities, so you’ll also need to assemble:
- Payroll records for employees involved in R&D
- Expenses, receipts, and accounts for equipment and supplies related to R&D
- Contracts and any paid invoices for third-party partners that assisted with R&D
- Patents, designs, drawings, blueprints, and prototypes generated by your R&D
- Any project or meeting notes related to R&D
For more information, see our detailed explanation of the R&D Tax Credit along with frequently asked questions. This is a complex process, so you’ll want to use a knowledgeable startup accountant to apply for this credit.
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