Top Tax Tips Every Startup Needs to Know

Chris Fitzpatrick for VentureFizz writes: Tax Compliance can be a pain. It’s not convenient for startup founders to think about taxes. Valuable time taken away from beating at your craft can be costly. Many tech startups even put their tax strategy on the back burner because the hope is they will get acquired before there are significant tax complications in their operations. Successful exits like this are very rare, but I can't knock the hustle.

• Keep track of those expenses, especially startup expenses. Stay organized. There are a growing number of intuitive cloud accounting software programs out there now which will help alleviate the stress of keeping your books. An excel spreadsheet can only go so far for you bootstrappers out there. It is about time you automate your accounting as much as possible which will also likely help to reduce your tax advisor/CPA fees. Quickbooks has come a long way, and I have had success with a newer cloud accounting program called Xero as well. Another thing, stay as lean as possible for as long as possible. Sounds all buzzwordy and cliché I know, but I see so many Startups and new companies incurring costs which can derail their growth and shorten their runway. Whether you are funded or bootstrapped, pay attention and eliminate those non essential expenses as much as possible.  If you are deciding between hiring more developers or moving into a better office space then I have lost you already.
  
• Know your potential tax exposure. Many Startups might not be aware of their potential tax exposure and filing requirements in other states. I see instances where the company has an entity setup in one state, but also has offices or sales to clients in multiple states. States vary, you could potentially have a filing requirement in a state, and not even know it. Know your potential tax exposure risk sooner than later.
  
• Don't just set it and forget it. Your tax planning should continue throughout the year, and not just at tax time. I see companies make a pivot, and they assume they should continue with the same tax strategy they had before which can cause so many problems.
  
• And this isn't tax related per se, but if you and your team are not using Asana as a project collaboration tool then you should be. I have personally used the tool since they beta launched, and impressed is an understatement.
  
• Have a CPA on call. Meet with a tax advisor/CPA before it is too late even if its not in the budget.. So many Startups wait until the very last minute to consult an advisor or try to go it alone because they are busy building their team, finding investors, developing awesome products, or acquiring customers. Please don't do this. A master of everything is a master of nothing. You will only be kicking the can down the road, and essentially creating more of a potential headache and/or tax liability for yourself, and your team.