In the quest to streamline tax season for startups, we’ve gathered insights from business owners and founders, among other experts, to bring you a comprehensive guide to the best tax preparation resources for startups. From the simplicity of investing in receipt management software to the sophistication of Avalara’s tax compliance automation, discover the top 18 tax preparation resources recommended for your startup.
- Wellybox: Investing in Receipt Management Software
- Gusto: Automating Payroll and Taxes
- IRS’s Small Business Tax Center: Wide Range of Resources
- Bench Accounting: Startup Tax Support
- QuickBooks Online: Comprehensive Management
- Microsoft Excel: Budget-Friendly Tax Prep
- TaxSlayer: Affordable Tax Preparation
- Xero: Startups’ Financial Processes
- TurboTax: User-Friendly Tax Software
- Stripe Atlas: Global Startup Tax Guide
- Bonsai: Freelance Talent Tax Prep
- Bookkeeper and CPA: Hiring for Taxes
- NASE: Offering Tailored Tax Resources
- Canopy: Facilitating Tax Advisor Collaboration
- Wave Accounting: Free Tax Prep Tool
- Taxify: Managing E-Commerce Sales Tax
- FreshBooks: Invoicing and Tax Prep
- Avalara: Automating Tax Compliance
Wellybox: Investing in Receipt Management Software
From the outset, I wouldn’t hesitate to recommend that you remain organized in the best way possible when you start your business. One of the best ways of staying organized, especially when preparing taxes, is to invest in receipt management software.
When it comes to preparing your taxes, there are several documents, such as cash register tapes, invoices, deposit information, and Forms 1099-MISC, that you’ll need to keep track of to know where your money is going in your business. I’ve learned, sadly, that keeping track of these physical forms is a process that can lead to missed deductions, as you will likely miss one or two documents. That’s why I always do my best, as a small business owner, to invest in receipt management software to easily track all business receipts and have a seamless process when filing tax returns.
My favorite receipt management software is Wellybox. This tool scans and reads your receipts, saving you invaluable time in preparing taxes and tracking thousands of your business receipts.
Stefan Campbell, Owner, The Small Business Blog
Gusto: Automating Payroll and Taxes
Given my extensive experience with startups and small businesses through Basecamp Legal, one tax preparation resource I consistently recommend is Gusto. My inclination toward Gusto stems from its sheer effectiveness in simplifying payroll and tax filing for small businesses and startups, many of whom may not have dedicated accounting departments. Gusto automates tax calculations and submissions, a critical task that can often be daunting for new entrepreneurs. This automation minimizes the risk of errors and ensures compliance with tax laws, making it invaluable for growing companies keen on maintaining their focus on business development rather than getting bogged down by administrative tasks.
From assisting various startups in Colorado and California to establish sound legal and financial frameworks, I’ve observed how Gusto has made a difference. One notable instance involved a tech startup struggling with payroll management and tax withholding for its rapidly expanding team. After integrating Gusto, they were not only able to streamline their payroll process but also managed to navigate the complexities of state and federal tax obligations smoothly. The platform’s user-friendly interface and robust customer support significantly eased their transition, demonstrating its merit beyond just software capabilities.
Additionally, Gusto’s feature that facilitates the handling of employee benefits and workers’ compensation in conjunction with payroll services is a game-changer. This consolidates several crucial functions into one platform, simplifying management tasks for business owners. In my line of work, harmonizing operational efficiency with compliance is paramount, and Gusto aligns perfectly with this objective. Its adaptability across different states, evidenced by the diverse geographic locations of the companies I advise, reinforces its utility as a versatile resource for tax preparation and financial management for startups across the US.
Adrienne Fischer, Founder, Basecamp Legal
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IRS’s Small Business Tax Center: Wide Range of Resources
I’d highly recommend the ‘Small Business and Self-Employed Tax Center’ provided by the IRS. It’s a comprehensive resource tailored specifically for startups and self-employed individuals. It offers a wide range of information, guides, and tools that can help startups navigate the complexities of tax preparation. It’s a reliable source directly from the government, ensuring accuracy and compliance with tax regulations.
Plus, it’s user-friendly, so it’s accessible for entrepreneurs who may not have an extensive background in finance. Utilizing this resource can save startups time and potential headaches, allowing them to focus more on growing their business.
Johannes Larsson, Founder and CEO, JohannesLarsson.com
Bench Accounting: Startup Tax Support
One tax preparation resource I would recommend for startups is Bench Accounting. Bench provides dedicated small-business tax support, including a bookkeeper paired with a CPA, to handle your startup’s taxes and filings for a simple monthly subscription fee.
In particular, your bookkeeper can capture and categorize all business expenses, income, deductions, etc., in Bench’s easy-to-use software. The CPAs then leverage this clean data to prepare and file extremely customized taxes structured to minimize your tax liability.
Bench’s team truly specializes in the needs of high-growth startups. So, beyond tax prep, they can advise on entity election analysis to optimize the treatment of investor equity, employee stock options, carryover losses, and more from the startup perspective.
Having ongoing guidance from CPAs well-versed in startup tax considerations ensures you capitalize on every allowable deduction and credit early on. And offloading the administrative tax prep labor frees you up for higher-level strategic work.
With Bench, rather than investing time tackling complex compliance yourself, you can rely on specialized startup tax experts to handle filings while you focus on customers and products. This allows first-time founders to build their businesses on a strong tax foundation.
Brian Meiggs, Founder, My Millennial Guide
QuickBooks Online: Comprehensive Management
When you’re a small-business startup, you want to get the most out of your software. Do-it-all solutions provide better bang for your buck, allowing you to manage everything through a single portal that houses all the relevant data needed to prepare your taxes and monitor the financial health of your business. This is why I recommend QuickBooks Online.
QuickBooks Online allows business owners to track expenses and transactions throughout the year, so there’s no mad scramble to gather all the relevant information required to submit taxes just before the filing date lapses. Packed full of functional features to help businesses, such as invoicing, bank reconciliation, and employee time tracking, it goes well beyond expense tracking. It can also be connected to bank accounts, credit cards, and hundreds of business apps, creating a seamless ecosystem to monitor your business.
While the temptation to leverage free tech is understandable for startups, I find this can often lead to disjointed workflows and frustrations when different software doesn’t integrate well. Besides, depending on the needs of the business and the payment plan selected, QuickBooks Online starts from as low as $15 per month—with a free 30-day trial.
Paul Carlson, Managing Partner, Law Firm Velocity
Microsoft Excel: Budget-Friendly Tax Prep
Call me old-fashioned, but I really like using Microsoft Excel for tax preparation for my startup.
For bootstrapped startups aiming to streamline taxes without splurging on accounting software, Excel is an invaluable asset. Excel is versatile and accessible, and it has enough power for entrepreneurs to organize financial records critical for accurate tax reporting (e.g., tracking income, expenses, invoices, receipts).
Excel’s superpower is its flexibility to be customized to any startup’s needs through formulas, functions, and automation. This reduces manual errors and saves precious time. Pivot tables and charts also enable deeper financial analysis if required.
There are also lots of pre-made Excel templates that exist for tax prep from Microsoft and users out there. While more hands-on than dedicated software, Excel’s adaptability and widespread entrepreneurial familiarity make it a budget-friendly tax prep tool. Excel provides excellent financial visibility without the high price tag, and hence I strongly recommend startups consider using it for their tax preparation.
Dr. Mark Farrell (FIA), Founder, CEO, Associate Professor & Actuary, ProActuary Jobs
TaxSlayer: Affordable Tax Preparation
For startups, I’d recommend checking out TaxSlayer for tax preparation. It’s a solid choice because of its affordability.
When you’re just getting your business off the ground, keeping costs in check is crucial, and TaxSlayer offers a budget-friendly solution without compromising on functionality. It offers a user-friendly interface and comprehensive features, making the tax preparation process relatively straightforward. Plus, the cost-effectiveness allows startups to allocate resources wisely in those early stages.
Joe Chappius, Financial Planner, Tax Climate
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Xero: Startups’ Financial Processes
As someone deeply involved with MAH Advising PLLC, handling corporate formation services and aiding startups in navigating the complex landscape of financial and regulatory compliance, I’ve come across numerous resources designed to streamline tax preparation for new businesses. From my experience, one standout resource that consistently proves invaluable for startups is Xero. This recommendation is rooted in my observations of its impact on simplifying financial processes for early-stage companies.
Xero’s appeal lies in its robust ecosystem, offering integrations with a wide array of business tools and services, which proves especially beneficial for startups operating in digital and tech spaces. For example, we’ve assisted clients in setting up their business structures and financial systems, and the seamless integration between Xero and other operational tools has drastically reduced the administrative burden on these companies. This efficiency is crucial during the early stages of a business when resources are limited, and focus should remain on growth and product development.
Moreover, Xero’s user-friendly interface and accessible design make it an excellent choice for startup founders who may not have extensive accounting backgrounds. The platform offers features like real-time financial reporting, easy invoice generation, and direct bank connections, which facilitate accurate and up-to-date financial tracking. This real-time insight into a company’s financial health is indispensable for making informed decisions quickly—a capability that’s often a determining factor in a startup’s success.
Additionally, Xero’s commitment to maintaining a high level of security and compliance with financial regulations offers peace of mind, allowing founders to focus more on innovation and less on backend financial management. From our work with startups at various stages of growth, the ability to scale with a business is where Xero truly shines. Its scalability means that as a company grows from a fledgling startup to a mature enterprise, Xero can adapt and continue to meet its evolving financial management needs without necessitating a system change.
From these experiences, I recommend Xero as an invaluable tax preparation and financial management resource for startups. Its combination of ease of use, comprehensive features, and scalability makes it an asset for new businesses aiming to streamline their financial processes while ensuring compliance and facilitating growth.
Michael Hurckes, Managing Partner, MAH Advising PLLC
TurboTax: User-Friendly Tax Software
In my experience advising startups on tax preparation, I highly recommend using an online tax software like TurboTax for small businesses. The interface is user-friendly and tailored to the unique needs of early-stage companies.
TurboTax walks founders through key deductions such as R&D credits, equipment expenses, and home office deductions. Their Q&A approach flags overlooked write-offs. Plus, TurboTax auto-fills state returns and e-files both federal and state taxes. This saves startups time and money on accountant fees. With easy import of financial records, collaboration tools, and unlimited expert support, TurboTax gives founders peace of mind that their taxes are done right. For most seed-stage startups, the Deluxe version provides all the features they need for a fraction of the cost of an accountant. As startups scale, they may consider switching to a full-service firm, but TurboTax lays the groundwork for smooth tax preparation.
For example, consider a software startup with two full-time founders working from home. With TurboTax, they can capture deductions for computers, internet expenses, home office use, car mileage, travel costs, etc. The Q&A prompts will ensure they maximize write-offs. TurboTax even allows you to snap photos of receipts for documentation. For under $200, the startup can file their federal and state taxes without needing an accountant. This frees up resources to focus on strategic priorities in the early days. Based on my experience, TurboTax provides an affordable DIY option for most early-stage startups’ tax prep needs.
Shawn Stack, Founder and Owner, Hallmark Timmins
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Stripe Atlas: Global Startup Tax Guide
For startups grappling with the complexities of tax preparation, I’ve found Stripe Atlas to be an unconventional yet invaluable resource.
Beyond its core offering of simplifying business setup and banking, Stripe Atlas provides an extensive guide to startup taxes that’s both accessible and practical. Its unique value lies in addressing the specific needs of online businesses and global startups, offering insights into everything from managing international sales tax to optimizing tax structures for digital goods.
This platform not only aids in tax preparation but also fosters a deeper understanding of financial management within the digital economy, making it my go-to recommendation for startups navigating the intricacies of taxation.
David Wilfong, Founder and CEO, DavidWilfong
Bonsai: Freelance Talent Tax Prep
For startups, Bonsai is an all-in-one freelancing tool that I recommend, especially for those relying on freelance talent.
Beyond contract management and time tracking, Bonsai offers tax preparation features designed to simplify the lives of freelancers and small business owners. It helps track expenses, estimate taxes, and even offers templates for tax-related forms. Bonsai provides a comprehensive solution to manage finances and prepare for taxes efficiently.
Gillian Dewar, Chief Financial Officer, Crediful
Bookkeeper and CPA: Hiring for Taxes
Excel is fine just for a basic business budget, but budgeting/cash-flow management and accounting are two different processes that require different tools. If you don’t already have a bookkeeper, get one, assuming the cost fits into your business budget. And a good CPA for taxes, preferably one who will not make you feel stupid for asking questions, but one who will advise you on the best tax structure, etc., for your business and how to maximize deductions without compromising profitability.
James McNally, Managing Director, SDVH [Self Drive Vehicle Hire]
NASE: Offering Tailored Tax Resources
I recommend The National Association for the Self-Employed (NASE); it offers resources and support specifically tailored to small businesses and entrepreneurs, making it a valuable resource for tax preparation advice. Membership includes access to tax advice from experts, which can be invaluable for startups navigating tax season for the first time.
The NASE also provides a variety of tax planning resources, including webinars and articles, to help startups stay informed on the latest tax strategies and regulations. This personalized support can be a game-changer for startups looking for guidance tailored to their unique challenges.
Bert Hofhuis, Founder, Every Investor
Canopy: Facilitating Tax Advisor Collaboration
I recommend Canopy for startups looking for an effective way to collaborate. It is a tax management and preparation software that offers a suite of tools designed to streamline the tax process for tax professionals and their clients.
Its client-management feature, which allows secure document exchange and collaboration, can be particularly beneficial for startups working with external tax advisors. Canopy simplifies the preparation process with its intuitive interface and robust features, making it easier for advisors to provide efficient and accurate tax services.
Phil Strazzulla, Founder, SelectSoftware Reviews
Wave Accounting: Free Tax Prep Tool
In my opinion, Wave Accounting is a fantastic resource for startups that are budget-conscious but still want a comprehensive tool for both accounting and tax preparation. It’s a free platform that offers expense tracking, invoicing, and receipt scanning, all of which are essential for accurate tax filing.
Wave can help startups keep their financial records organized throughout the year, making tax season less stressful. Its user-friendly dashboard is particularly appealing for entrepreneurs who need straightforward financial management tools without a steep learning curve.
Ian Sells, CEO, Million Dollar Sellers
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Taxify: Managing E-Commerce Sales Tax
Taxify by Sovos is a solution I recommend for startups involved in e-commerce and digital services, especially those selling across state lines or internationally. Taxify simplifies the complexity of sales tax compliance, offering automatic tax rate updates, filing, and remittance across jurisdictions. Its ability to integrate with popular e-commerce platforms automates the sales tax collection process, reducing the risk of non-compliance.
Michael Nemeroff, CEO & Co-Founder, Rush Order Tees
FreshBooks: Invoicing and Tax Prep
One tax-preparation resource that stands out for startups is FreshBooks. While primarily known for its invoicing and accounting features, FreshBooks also offers comprehensive tax-preparation capabilities.
With features like expense tracking, receipt scanning, and tax-time reports, FreshBooks simplifies the tax-filing process for startups, eliminating the need for manual data entry and spreadsheet management. Additionally, FreshBooks integrates seamlessly with popular tax software like TurboTax, ensuring startups can easily transfer their financial data for accurate and efficient tax preparation.
Gavin Yi, CEO, Yijin Hardware
Avalara: Automating Tax Compliance
Avalara is a cloud-based tax compliance solution that automates sales and other tax calculations, as well as the filing process. It’s particularly suited for startups that operate online or sell across multiple states or countries, navigating the complex web of tax jurisdictions and regulations.
Avalara’s integration with major e-commerce and accounting platforms makes it a seamless addition to a startup’s financial toolkit. I recommend Avalara to startups looking for a scalable, automated solution to manage their sales tax compliance as they grow.
Brooke Webber, Head of Marketing, Ninja Patches
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