5 Tax-Saving Tips for Founders

"As a founder, what's your biggest source of stress?"

If you said taxes, you're not alone. We hear it from our customers daily. But here's a fact that may surprise you: Even if your startup isn’t making profits, you can still save money on taxes. How? It's called the R&D Credit, which could get you up to $500,000 back from the IRS. Why? Because you're paying payroll taxes for your team, you can claim this credit when you file your taxes, and you might pay a lot less. But act fast, or you might miss out.

While startup taxation is unavoidable, that doesn't mean it can't be made a little easier by being "in the know"! Fondo can help you get cash back from the IRS and handle the R&D Tax Credit and the Employee Retention Tax Credit for you, then optimize and file your taxes, and you’ll get cash back — the average startup gets $21,000 per year.
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To help you out, here are 5 tax tips for saving money:
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1. Know Your Tax Liability

Begin by identifying your tax type.
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2. Stay Updated on Tax Laws

Keeping a finger on the pulse of tax amendments ensures you don't miss out on breaks.
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3. Maintain Records

Solid bookkeeping is vital for tax time. Invest in efficient accounting tools.
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4. Employ Relatives

Hiring family can unlock tax perks and act as a deductible business expense.
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5. Streamline Payroll

Understand the nuances of employee-related taxes and consider professional assistance.
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More things to know

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Is Tax Filing a Must for Startups?

The answer, from the U.S. IRS, is a resounding yes. All ventures, including those in their nascent stages, need to present annual tax returns, especially if they've acquired an EIN letter. Even if this letter made its appearance late in the year, tax filings for that duration are mandatory.

Reasons to file? First, it's a government mandate. Second, potential refunds on losses. Thanks to current tax regulations, your past losses might be your ticket to trimming your future tax bills.

Mark Your Calendars for Upcoming Tax Deadlines:

The way you've set up your enterprise decides your tax preparation timeline for 2023. Missing these deadlines? The IRS might penalize you with 5% of unpaid taxes every month. And if your payment doesn't see the light of day within 60 days post the deadline, the penalties can shoot up.

Key 2023 federal tax due dates include:

• October 16: Extended deadline for C Corp/Individual Income Tax return (for 2022)
• December 1: Potential DE Franchise Tax estimated payment (20%, if applicable)
• December 15: Q4 Federal/State Income Tax payment

Deciphering Tax Forms for Startups:

Before delving into tax documentation, ensure you're equipped with the right forms. An oversight here can cost your startup valuable refunds. Depending on your startup's framework, here are some pivotal U.S. tax return documents:

• C corporations: Form 1120 lays out income, deductions, and tax dues.

Need help filing the RD Credit?

Try Fondo ⚡

Disclaimer

This blog for informational purposes only and does not constitute legal or tax advice or create an attorney-client relationship. Companies should consult their own attorneys or tax accountants for advice on these issues. Because of the generality of the issues discussed in this piece, the information provided may not apply in all situations and should not be acted upon without specific legal or tax advice based on particular situations.

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