Startup tax
Startup Tax Planning
Entity strategy, Delaware franchise tax, §174 R&D capitalization, the R&D tax credit, QSBS, and multi-state nexus — coordinated from incorporation through exit.
What you get
Four levers most startups underuse
Entity & Delaware
C-corp vs. LLC, S-elections, and Delaware franchise tax filed under assumed-par.
R&D credit + §174
Federal R&D credit, payroll-tax offset, and five-year §174 amortization.
QSBS planning
Section 1202 qualification preserved from incorporation through exit.
Multi-state nexus
Income, payroll, and sales-tax nexus mapped before it becomes a fundraising blocker.
Scope
Startup tax planning topics we cover
- C-corp vs. LLC vs. S-corp election (Form 2553) for founders
- Delaware franchise tax — assumed-par method to avoid $80K+ surprise bills
- Federal Form 1120 and state income tax in every operating state
- R&D tax credit (Form 6765) and the pre-revenue payroll-tax offset (Form 8974)
- §174 R&D capitalization and amortization (5-year domestic, 15-year foreign)
- QSBS (Section 1202) qualification and the 5-year holding clock
- 83(b) elections within 30 days of restricted stock grants
- ISO vs. NSO planning and AMT exposure on exercise
- Sales-tax economic nexus thresholds (Wayfair) by state
- Estimated tax payments for the corporation and the founder
FAQ
Startup tax questions
When should a startup start tax planning?+
Before incorporation if possible. Entity choice, equity timing, and QSBS-clock decisions made in year one drive seven-figure outcomes at exit.
What is §174 R&D capitalization?+
Since 2022 startups must capitalize and amortize R&D costs — 5 years for US R&D, 15 years for foreign. Even unprofitable startups can owe federal tax because of it.
How much is the R&D tax credit worth?+
Qualifying pre-revenue startups can offset up to $500K/year of employer payroll taxes. Most credits land between 7% and 14% of qualifying R&D wages and contractor spend.
Should I convert from LLC to C-corp before raising?+
Almost always before a priced round. Investors expect Delaware C-corp, and QSBS only starts running from incorporation as a C-corp.
What is QSBS and why does it matter?+
Section 1202 lets founders and early employees exclude up to $10M (or 10x basis) of gain on qualified C-corp stock held 5+ years. It is the single most valuable founder tax break in the code.
When do I need to file in another state?+
When you have an employee, a physical office, inventory, or — for sales tax — cross the state's economic nexus threshold (typically $100K in sales or 200 transactions).
Vetting checklist
Questions to ask a startup CPA
- 1How many venture-backed or high-growth startups do you currently work with?
- 2Do you handle R&D credit, §174 capitalization, and Delaware franchise tax in-house?
- 3What's your monthly close timeline, and what does the deliverable pack include?
- 4Can you support a future audit, 409A valuation, and equity comp accounting?
- 5How is pricing structured as we grow from pre-seed to Series A?
Featured Professionals
Featured startup CPAs and firms
Verified professionals will appear here as profiles are claimed and reviewed.
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Houston CPAs serve energy, healthcare, and the city's vast small-business community.
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LA's accountants specialize in entertainment, real estate, and creative-industry tax planning.
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San Francisco CPAs serve startups, venture-backed companies, and complex equity-comp clients.
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NYC's accountants cover Wall Street, media, real estate, hospitality, and the small businesses of all five boroughs.
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Miami's CPAs specialize in international tax, real estate, hospitality, and Latin American business.
Chicago, IL
Chicago accountants serve professional services, manufacturing, logistics, and the Midwest's largest corporate base.
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Atlanta's CPAs support film, fintech, logistics, and one of the country's most dynamic small-business scenes.
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