Startup Taxes

Our Tax Leaders

Leading a team of pros that completed 275 startup returns in 2017

Vanessa Kruze, Kruze Consulting Core Team

Vanessa Kruze, CPA

Founder & CEO

Vanessa Kruze, CPA, founded Kruze Consulting in 2012. Vanessa has helped over 500+ startups, prepared 1000+ startup tax returns, and oversees ~1 startup acquisition every month. Prior to founding Kruze Consulting, Kruze worked at Deloitte Tax and as the Controller of a startup with more than 120 employees.

Stephen Yarbrough, Kruze Consulting Core Team

Stephen Yarbrough, CPA

Vice President of Tax

Stephen Yarbrough, CPA, is an expert in tax, joining Kruze Consulting as their VP of Tax with 20 years of career tax experience. Before Kruze Consulting, Stephen spent 6 years as an agent at the IRS and 8 years as a Tax Manager at PricewaterhouseCoopers. He is a graduate of UT Austin.

Startup Tax Return Cost Calculator

Our online tax return cost calculator estimates the cost of tax preparation – try it now for free!

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The cost of startup's tax return could vary based on different factors including: transaction volume, industry, revenue, or others. Please contact us for a free consultation

Startup Taxes Key Terms

California Franchise Tax
Delaware Franchise Tax
Startup Tax Return
1099 IRS Forms
Tax Reporting for ISO and NQSO
R&D Tax Credits
What documents are needed to complete a startup’s tax return?

California Franchise Tax

Any business or startup that is doing business in California will get hit with the California Franchise Tax. So if you have employees, an office in California, or revenue in California, then you likely own this fee. When is the California Franchise Tax due? April 15th. And don’t expect any helpful postcards or notifications from the state of California! How much do is the California Franchise Tax for startups? If you are an early stage company operating at a loss, then it’s likely that the California Franchise Tax will only be about $800. There are a few variables that could make this a little higher, but for most startups (unprofitable companies, that is), you’ll pay $800. If you are profitable, make sure you do work with your CPA to calculate this fee correctly.

Delaware Franchise Tax

All Delaware incorporated companies have to pay an annual Delaware Franchise Tax - including startups. This expense has nothing to do with profitability, or even revenue - you have to file if you are incorporated in DE. When is the Delaware Franchise Tax due? March 1st. How much is Delaware’s Franchise Tax for startups? If you haven’t raised that much money, maybe half a million in seed financing, then you are likely to owe not more than $1,000. If you’ve raised $10 million in venture capital, then you likely own about $4,000. We help our early stage clients calculate their Delaware Franchise Tax, so if your CPA isn’t helping your startup with this then you should consider getting a CPA who is used to working with funded companies.

Startup Tax Return

How much should a startup expect to pay for a tax return? After analyzing thousands of startup tax returns across many industries, Kruze Consulting developed a calculator to estimate startup tax return costs. You can find it on our website here, and we invite you to visit the site and try it out. As a benchmark, a straightforward Series A tech company can expect to spend around $2,000 for their annual return. However, your cost may vary. Startup tax return costs are generally based on four factors, which we cover below. First, are you a seed, Series A, or Series B company? Your stage of fundraising has a direct impact on the return cost. Second, what industry are you in? A marketplace, a SASS, and a Fin-tech company can expect different tax return costs. For example, a Fin-tech or marketplace can be more expensive than just say a plain vanilla SASS or tech company. Third, where do you have payroll? Rent? Sales? The answers to these questions will determine where you have “nexus,” and the concept of a nexus is important because it determines which state or states you will need to file a tax return in. The more states, the more costly. Last, what is your volume and complexity? Do you have a lot of transactions or just a few? Are you complex with several international components or do you have a parent or subsidiary companies? The answers to these questions determine the workload required, and the price will go up a bit as volume and complexity increase.

1099 IRS Forms

1099s are an IRS form due each year by January 31st. Who your startup needs to give this tax form to depends on how much you’ve paid your cash-basis contractors during the previous year, and what type of contractor they are. Specifically, anyone who is not a corporation and was paid over $600 in aggregate will need to get a 1099. So LLCs and sole proprietors (often contractors like marketing contractors, some lawyers, and landlords), paid over $600 during the previous year, will require a 1099. If you are unsure what type of contractor you have been working with, have your startups send them a W-9 to complete. Remember, 1099s are due by January 31st, and your startup must provide one to any non-corporation you paid over $600 in the previous year.

Tax Reporting for ISO and NQSO

In December and January of each year, startups often start to wonder what they should be doing with all of those employees and contractors to which they’ve given incentive stock options and non-qualified stock options (“ISO” and “NQSO”). There is a very important deadline for companies that have granted ISO’s or NQSO’s. The ISO and NQSO forms are due by January 31. Businesses only have a short window after the end of the previous year to make sure that you have the form for your employees and your contractors who have received this type of stock incentive. Then, you need to know the difference between the two types of stock options—incentive stock options and non-qualified stock options. Incentive stock options (ISO’s): Your startup can only give ISO’s to employees! And if you have, you’ll need to fill out Form 3921. Your CPA can complete the form for you, or if you have a special subscription on Carta or Capshare, they can assist as well. Non-qualified stock options (NQSO’s): NQSO’s can be given to either employees or contractors. For employees, you will want to adjust box 12 on their W-2 Form, and provide it to them by January 31st. You’ll. need to work with your payroll provider, perhaps Gusto or TriNet, to make sure the W-2 adjustment is done. For contractors, you’ll need to file Form 1099 Miscellaneous. That is tax reporting for ISO’s and NQSO’s! Again, for ISO’s must have a Form 3921 filed, and for NQSO’s you want to adjust employee’s W-2 for and file Form 1099 Miscellaneous for contractors.

R&D Tax Credits

There have been major changes in how R&D tax credits work in the United States recently, and now many unprofitable startups are eligible to actually save money on their payroll taxes by taking advantage of these changes! The maximum amount an unprofitable company can save is $250,000 per year in payroll taxes - so that means that an unprofitable startup could theoretically save up to a quarter of a million dollars next year! It’s a big deal. Kruze Consulting has conducted R&D tax credit studies that are going to save our clients over $3 million in the coming year. Talk to our experts to see if your startup can cut its burn with these credits, and you can learn more about R&D tax credits for startups here.

What documents are needed to complete a startup’s tax return?

You will need the following documents in order for our accounting team to complete your return:

EIN Letter from the IRS (this is the Employer Identification Number letter that the IRS created for you when you requested an EIN for your company.)
Vital Business Statistics

Business Address
Shareholder SSN/Address info

Prior Year Tax Returns (Federal and States)
Local Tax Returns (if any)
Financials

Full year Balance Sheet
Profit & Loss Statement
General Ledger

Capitalization Table

Our web application makes it easy for you to share these files with us; simply login and upload the documents as you go through our tax software onboarding flow.

What documents are needed to complete a startup’s tax return?

About Us

A CPA Firm Specialized in Startup Accounting & Finance

Startups are our niche, and our passion. Our clients have raised over half a billion in venture capital financing in the past 12 months. We are one of only a few accounting firms that specialize in funded startups - we only offer financial and tax services to fast growing startups in the Seed, Series A, Series B and Series C stages.

The Right Accounting Partner for Your Startup’s Next Round

We know how to de-risk your startup’s next venture capital round. Our team makes sure sure you are ready to fly through your next VC’s accounting, HR and tax due diligence. And when you use us as your bookkeeper, we set up and keep up-to-date a due diligence folder so you can get that next round of fundraising.

A Leader in Cloud Accounting Software

Our practice is built on best of breed cloud accounting software like QuickBooks, Xero, Netsuite, Gusto, Zenefits, Expensify, Avalara, Brex iand Bill.com. Technology makes us more efficient, saving our clients money and letting us offer higher value services like FP&A modeling, 409A valuation and venture debt consulting. Startups deserve to work with CPAs using modern software.

Trusted by Top Venture Investors

Top angel investors and VCs refer Kruze because they trust us to give the right advice. Our clients are portfolio companies of top technology and Silicon Valley investors, including Y-Combinator, Kleiner, Sequoia, Khsola, Launch, Techstars and more. With us, your books and taxes are in order when it’s time to raise another round of venture financing.

What types of startups does Kruze Consulting usually work with?

Kruze Consulting works with a variety of funded Delaware C-Corps, but the majority of our companies have secured Seed, Series A, Series B and Series C. We look to partner with our startups, going beyond the typical accounting relationship and seeking to provide a higher level advisory role. We feel honored to be a part of making the world a better place, even if it’s one debit and credit at a time.

Accounting, Finance, Taxes, & Payroll all in one solution

Startup CFO services, startup accounting and bookkeeping services, startup annual taxes, expense reports, payroll, benefits: we've got you covered. Custom tailored dashboards are provided weekly or monthly, depending on your preference. Startup founders are often too busy building their company that they don’t have time to take care of their finances. Traditionally, these startups have had to work with a basket of people to get their work done, including bookkeepers, accountants, AP clerks, CFOs, startup consulting companies, and tax accountants. Just coordinating the conversation between all these parties drained even more of a founder’s precious time. At Kruze Consulting, our founders have one point person to manage all startup accounting needs, which saves them time and money.

Estimate What Your Startup’s Tax Return Would Cost

Kruze Consulting is the perfect Accounting, Finance and Tax partner for Los Angeles Startups. Kruze delivers exceptional monthly reporting and financial projections. When we need help with benefits or payroll, Kruze solves our problems.

Brett O'Brien

As a startup, moving quickly is a top priority for us and we just needed to get our tax return done. After we uploaded our docs, we got our tax return in 3 days! E-filing was confirmed by Day 4. Super responsive and helpful!

Casey McKerchie

We tried using other CPAs to prep our startup tax return only to find that they weren't startup experts. Kruze knows R&D, SAFE Notes, SaaS, and venture debt and they gave us valuable advice. We have 100% confidence in their work.

Farhad Massoudi

Kruze does startup Tax Returns

Our proprietary software lets us offer startups tax returns at affordable prices*

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Startup Tax Returns - fast!

Over $3 Million in Startup Payroll Tax Savings from R&D Tax Credits

Our Tax Leaders

Vanessa Kruze, CPA

Founder & CEO

Stephen Yarbrough, CPA

Vice President of Tax

Startup Tax Return Cost Calculator

Our online tax return cost calculator estimates the cost of tax preparation – try it now for free!

Cost Estimate Calculator Form

Company Info

Employee Info

Logistics

Disclaimer

Frequently asked questions

Startup Taxes Key Terms

California Franchise Tax

Delaware Franchise Tax

Startup Tax Return

1099 IRS Forms

Tax Reporting for ISO and NQSO

R&D Tax Credits

What documents are needed to complete a startup’s tax return?

Kruze Startup Tax Returns

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