R&D Expenditure Capitalization Rules (New for 2022) The TCJA amended Section 174 relating to the federal tax treatment of research or experimental expenditures paid or incurred during the taxable year. The new Section 174 rules require taxpayers to...
Accounting
Research and Experimental Expenditure (Section 174) Tax Treatment Changes Startups Need to Know
As part of the Tax Cuts and Jobs Act (TCJA), there was a change to Section 174 that directly impacts the R&D tax credit many startups take. Beginning after 12/31/2021, research and experimental expenditures need to be capitalized instead of expensed as previously...
COGS in SaaS: Understanding Cost of Goods Sold
Unlike e-commerce businesses and manufacturers, software-as-a-service (SaaS) companies usually don’t have inventory in the traditional sense. Instead, modern software is delivered to customers through the rental of servers and cloud storage services, where the...
Accrual-Based (GAAP) Accounting and Its importance for Tech Companies
Accounting can be more complicated than you expect. Even if you feel completely comfortable monitoring your personal finances, once you found a startup, there’s more to consider. Specifically, companies have to factor in accounts payable (AP) and accounts receivable...
PEO vs. Payroll Company: What Should My Tech Company Choose?
When your startup is in its early stages, it makes sense to outsource. You might hire a fractional CFO, and you’ll likely hire an accounting firm. You may also want to explore outsourcing a lot of the key functions of a human resources (HR) department. Fortunately,...
Best Practices for Your Tech Company’s Expense Policy
When you’re an agile startup, allowing your employees to expense items and ask for reimbursement can give you a level of flexibility that you probably need. But it can also add a layer of complexity that you probably don’t need. That’s especially true if you don’t...
The Truth About Being a Tech Company Service Provider
As a CPA, I’ve been working with technology companies since 2010. It started out as something I did on the side, but it turned into a full-time business in late 2013. The tech industry is a unique animal, and I’ve learned a lot over the last decade. As I’ve been...
Tax Benefits for Founders: Qualifying Small Business Stock (QSBS)
As a founder, you’re probably going to issue yourself a significant number of shares in your company. The goal there, of course, is to make some (ideally, a large amount) of money down the road. But the amount you’ll be able to pocket hinges on how you handle your...
Startups – What’s your burn rate?
It might be time to update the old adage. Maybe it’s not cash that’s king, but cash flow. One study conducted by U.S. Bank concluded that 82% of business failures can be chalked up to bad cash management. When your startup’s in its early days, it probably isn’t...