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How Stage 1 Financial Taps Automation to Help Startups Wrangle Tax Complexity

cpa for startups

It is possible that some of the factors will indicate that the worker is an employee, while other factors may indicate a worker is an independent contractor. What the IRS is looking for are workers who are treated as independent contractors but who actually are employees. If the IRS is successful in reclassifying workers, there is the potential of a substantial tax bill, consisting of, just for starters, the employer’s back social security taxes, and FUTA taxes, plus possible penalties and interest.

  • Eric Ver Ploeg, founding partner of Tunitas Ventures, discusses Series A investing, including timing, choosing VCs, shutting down a startup, startup valuations, and more..
  • Accountants perform bookkeeping, prepare tax returns and profit-and-loss statements, and financial and tax planning.
  • It involves keeping track of income, expenses, assets, liabilities, and equity to provide an accurate and comprehensive view of the company’s financial health.
  • Her extensive background in payroll, bookkeeping and management makes her an invaluable resource for clients to utilize.
  • Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
  • Statistics show that partnering with a CPA significantly improves small business profitability and longevity.

Partner with us from day one to let our team support you through your startup’s growth stages. The profit and loss statement, also known as the income statement is where the revenue model and cost structure meet. It provides a summary of your startup’s revenues, expenses, and net income (or loss) over a specific period. It outlines the profitability of your business operations by subtracting total expenses from total revenue. For example, if your startup generates $50,000 in revenue but incurs $60,000 in expenses, your net loss is $10,000.


You gain peace of mind with a CPA handling the books and financial record keeping. Then, you’re free to focus on innovation, customers, and future growth rather than administrative tasks. Unprofitable startups can seriously reduce their burn rate – up to $500,000 per year. Don Muir of Arc explains Arc Capital Markets, a marketplace for bespoke venture debt and startup-focused credit products. One team to manage your exit diligence, from financials to tax to audit support.

cpa for startups

This will enable you to make informed decisions regarding your startup’s finances. Understanding these accounting terms is essential for startups as they form the foundation of financial reporting and analysis. By grasping these concepts, startups can effectively communicate their financial position and performance to stakeholders, including startup cpa investors, lenders, and potential business partners. Some business owners delay hiring a CPA to keep their costs down, but investing in the right one will be well worth the cost. If you have accounting software like Xero, QuickBooks, or Bench (that’s us!), already in place, check that your prospective CPA knows how to use them.

Popular Accounting Software for Startups

Our clients are saving over $25 million in payroll taxes this year due to our tax team’s R&D tax credit work. Our premium package offers access to strategic expertise from professionals that understand your startup’s needs. Our timesaver package will provide you with a proactive partner who will handle your accounting needs while you focus on business.

cpa for startups

The determination depends on a number of factors and can be quite complex. The IRS has developed 20 factors (Rev Rul 87-41) that it considers when examining whether there is an employer-employee relationship. The factors only serve as guides and not all of the factors are necessarily relevant in every situation.

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