Why marketplace companies need specialized accounting expertise
Marketplace Companies
A marketplace is not a new idea, by any stretch. Specialized places to exchange goods and services have been around for thousands of years. But the modern marketplace company — specifically, a digital marketplace platform — comes with its own unique considerations. That’s especially true when it comes to accounting for a marketplace company.
In modern parlance, marketplace companies are businesses that operate digital platforms where buyers and sellers can engage in transactions for goods and services. They facilitate the exchange of those goods and services between the buyers and sellers, often taking a commission or fee for each transaction.
As a marketplace company, you can offer several advantages over traditional retailers and service providers. You provide a broader selection of products and services, often at lower prices, due to increased competition. You also provide sellers with access to a large customer base, reducing the need for costly marketing and advertising. In other words, you’re offering a win-win for everyone.
How to Accomplish a Win-Win
To accomplish that, your marketplace company might utilize a variety of business models, including business-to-consumer (B2C) and peer-to-peer (P2P) marketplaces. You likely rely on data analytics and machine learning to optimize the user experience and improve search results, too.
As a result, beyond traditional business functions like finance, marketing, and operations, your company also requires specialized roles such as product managers, UX designers, and fraud prevention specialists. These roles are critical to the success of the company’s platform and user experience.
All of this differentiates your company from traditional businesses. So if you’re operating in the same space as marketplace companies like Amazon, eBay, Airbnb, Uber, and Etsy, you need to explore some specific accounting considerations.
Specialized accounting for your specialized work
Your marketplace company operates under a unique business model that requires careful accounting and financial management. Here are some key accounting considerations for you:
Customer acquisition costs
Most marketplace companies rely heavily on digital marketing to acquire customers. You need an accountant with expertise in the industry and its metrics to properly track customer acquisition costs like the cost of search engine marketing and affiliate marketing.
Sales taxes and VAT
Marketplace companies may be required to collect sales taxes or value-added taxes (VAT) on behalf of third-party sellers. In many cases, accounting for these taxes requires specialized knowledge of tax regulations and accounting standards.
International operations
Marketplace companies often operate in multiple jurisdictions, each with its own accounting and tax regulations. To account for operations abroad, you need someone with specialized knowledge of international accounting standards and tax laws.
Marketplaces needs to consider:
Specialized accounting for marketplace companies
Ultimately, your marketplace company has to navigate a complex landscape of accounting and financial reporting requirements. At the same time, you’re tasked with ensuring compliance and effective financial management in a dynamic, fast-changing industry.
Fortunately, you don’t have to go it alone. Our ShayCPA has expertise in all of the accounting areas we just laid out. To learn how we can help your marketplace company thrive, contact us today.
Case Study
Super
Super is a pre-seed pre-launch “friend-raising” platform founded in early 2020 by two friends in Brooklyn who believe there’s a better way for the everyday donor to support the causes they care about.
There are millions of charities, big and small, committed to tackling our world’s most critical issues. But this vast selection can make it overwhelming for the everyday donor to find the right organizations to support. Inspired by the ETFs of the investing world, Super’s new giving solutions enable users to donate to curated collections of high-impact organizations managed by thought-leading activists, influencers, and communities.
The Super app empowers donors by giving them ways to stay updated on how funds are allocated, join community discussions, and measure the impact of their giving across all the causes they care about. Super puts giving on auto-pilot and maximizes the impact of every dollar of a donation.
So how does a small startup aiming to save the world one donation at a time deal with its first tax return? They hired a small team who has experience in the chaos that is pre-seed taxes, and we were able to answer questions like
- Do we qualify for the R&D credit?
- We didn’t make revenue last year. Does that mean we don’t need to pay taxes?
- My co-founder put $X into the business; how do we handle that?
“Akshay and the ShayCPA team made our annual tax filings a breeze. They work fast, they’re extremely knowledgeable, and overall an absolute pleasure to work.”
Monthly Accounting Pricing
Quarterly
Starting at
- Reconcile Quickbooks Online (10 hours per Quarter)
- Cash-Based Bookkeeping
- Quarterly Video Review
- Chart of Accounts Template Provided
- Annual Meeting
Pre-Seed
Starting at
- Reconcile Quickbooks Online
Accrual Based Bookkeeping - Monthly Call
- Chart of Accounts Template Provide
A/P A/R Tracking By Client
Monthly
Starting at
- Reconcile Quickbooks Online
- Accrual Based Bookkeeping
- Monthly Call
- Customized Chart of Accounts
- Deferred Revenue Recognition
- A/P, A/R Tracking
- Inventory/COGS Reconciliation
- Financial Metrics
- Sales Tax Filings *
- Monthly Financials delivered by the 15th after month end
*up to one state included in sales tax
Series A & Beyond
Based On Your Needs
Custom Quote
(discount if billed annually)
- Reconcile Quickbooks Online
- Accrual Based Bookkeeping
- Monthly Calls and ongoing communication
- Customized Chart of Accounts
- Deferred Revenue Recognition
- A/P, A/R Tracking
- Inventory/COGS Reconciliation
- Board Financials and Metrics
- Sales Tax Filings
- Monthly Financials delivered based date requested
Additional Tax Services
State and local taxes (SALT)
Beyond the corporate taxes to which your company is subject, we also provide services for any state and local taxes that apply to your startup. For example, we work with many tech companies incorporated in Delaware and support them with their Delaware Annual Filings.
Cross-border taxes
If you work with international investors or you plan to expand abroad, our cross-border tax expertise can help you comply with the complex applicable tax regulations. We have experience working with companies that have connections in Lebanon, Canada, the UK, South America, and various EU nations.
Our Process
1
Step 1: Contact Us
Get in touch and we’ll reach out to you to schedule a video call to better understand your tech startups needs and prepare a custom quote.
2
Step 2: Onboarding
We’ll invite you to our secure client portal where you can use our easy to use onboarding checklist to get started. See general pricing guide here.
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Step 3: Review
We schedule ongoing video calls with you to review your financials and ensure all of your tax compliance is taken care off.
If you’re ready to explore our tax services for tech startup C corporations, don’t hesitate to contact our team today.