The tax and financial quirks
- The Section 174 whiplash is not over, it just changed direction. From 2022 through 2024, R&D expenditures had to be capitalized and amortized, which manufactured taxable income at companies with heavy engineering payroll. The 2025 law restored immediate expensing for domestic R&D (new Section 174A); foreign R&D still amortizes over fifteen years. The live questions now are cleanup questions: how to deduct the amounts still sitting capitalized from 2022 to 2024, whether the small-business retroactive election (its window ran through July 6, 2026) was used well, and whether prior-year returns handled the transition correctly. We run this analysis on every tech engagement that has engineering payroll in those years.
- R&D credit eligibility is under-claimed at small tech companies. The Section 41 R&D credit can offset up to $500,000 in payroll taxes annually for qualified small businesses. Eligible companies include nearly any software startup with technical risk and iterative development. Most firms do not go through the process of documenting the four-part test because it requires effort. We do.
- Equity compensation has timing decisions at every grant. An ISO exercise creates an AMT preference item that non-specialist firms routinely model incorrectly. NSOs trigger ordinary income and payroll tax at exercise. RSUs vest and trigger ordinary income on vest. An 83(b) election on a restricted stock grant is a 30-day decision that is routinely missed. A founder with $800K of unvested RSUs needs a model that shows federal, state, AMT, and Medicare exposure at each vest date.
- Qualified Small Business Stock (QSBS) is the most valuable exit provision most founders never heard of. Section 1202 lets founders and early employees of qualified C-corporations exclude gain on a sale of stock, and the 2025 law made it materially better for new issuances. Stock issued after July 4, 2025 carries a $15M (or 10x basis) exclusion cap, a $75M gross asset test, and a tiered exclusion: 50 percent at three years, 75 percent at four, 100 percent at five. Stock issued before that date stays under the old rules: $10M cap, $50M asset test, five-year cliff. The eligibility rules are specific either way: C-corp, original issuance, an active trade or business, and a holding period clock that does not start until the stock is actually issued in a qualifying manner. We document the eligibility at grant, not at exit.
- Multi-state remote teams trigger payroll, income tax, and sales tax nexus. A Delaware C-corp with engineers in California, Texas, and New York has registration, withholding, and filing obligations in all three states. State income tax apportionment and payroll tax registration are two separate workflows, and neither is optional. The sales tax nexus layer runs on both tracks: remote employees create physical-presence nexus where they sit, and customers create economic nexus where they buy.
- ASC 606 revenue recognition affects financial statements before it affects taxes. Annual contract value paid upfront is not recognized as revenue in the period received. A $240,000 annual SaaS contract paid in January is recognized at $20,000 per month under ASC 606. The tax treatment depends on the entity's accounting method (cash vs accrual). The financial reporting to investors depends on ASC 606 regardless. Most bootstrapped tech companies are on cash for tax and need accrual for fundraising, and we handle both.
How we engage tech and SaaS companies
Most tech and SaaS companies start with tax strategy and preparation. From there, engagements deepen based on the complexity of the business: quarterly advisory for year-round strategy, embedded fractional CFO for multi-entity or growth-stage operations, entity restructuring when the business crosses natural thresholds. The engagement matches the need, not a template.
Where AI comes in
The highest-leverage AI use in a SaaS company is not in the product, it is in the operational stack. Customer success workflow automation, support ticket triage and drafting, sales ops tooling around lead scoring and outreach, and internal reporting dashboards that pull from multiple data sources. We help the finance function build and interpret reporting that runs on top of the AI tools the revenue and ops teams are already adopting.
Who this fits
Bootstrapped SaaS companies with $500K to $20M in ARR. Venture-backed startups from pre-seed through Series B with a clear path to financial control. Dev shops and technical consulting firms with equity in client companies. Founders contemplating a sale, a secondary, or a QSBS-qualifying exit in the next five years.
First engagement
A free consultation. We review the cap table, the most recent financials, the current tax posture, and the R&D credit eligibility. If we are a fit, we scope an onboarding that includes a Section 174 assessment, an R&D credit feasibility check, a QSBS memo for the founders, and a current-year tax projection. Monthly work begins during onboarding and runs from there.
Tech founders tend to know exactly what they do not want from a CPA: slow, mechanical, and expensive-for-the-wrong-reasons. The opposite of that is not a price point. It is a philosophy.
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