Simplify Your 2024 Tax Filing: A Guide for Tech Company Owners and CFOs

Does the thought of filing your tech company’s taxes make your shoulders tense? If so, you’re not alone. Many tech founders and CFOs feel stress around tax season, often because of surprises or not knowing what to expect.

The good news? A little preparation goes a long way. By focusing on a few key areas, you can make filing your 2024 taxes smoother and less stressful.

We’ve gathered insights from our Founder and CEO, who has years of experience helping tech companies navigate complex tax filings. Here are his top tips to avoid unwelcome surprises and streamline the process for your business.

1. Understand Changes to R&D Deductions (Section 174):

If your company spends heavily on research and development (R&D), there’s an important change you need to know. Historically, R&D expenses could be deducted in the same year they were incurred. However, amendments to Section 174 of the Internal Revenue Code, introduced by the Tax Cuts and Jobs Act of 2017, changed that.

Starting in 2024, R&D expenses must be amortized—spread out—over five years for U.S.-based companies and 15 years for foreign entities. This shift could significantly impact your financial planning and spending.

Pro Tip: Adjust your R&D budget with these changes in mind. If you rely on upfront deductions, it might be time to rethink your spending strategy. And stay updated—Congress is considering adjustments to Section 174, which could bring further changes.

2. Optimize Your Accounting System

The right accounting system can save your team hours and prevent costly mistakes. Tools like QuickBooks Online and Xero are user-friendly, sync real-time bank and credit card transactions, and generate essential reports with ease.

But automation alone isn’t enough. Dedicate time each week to reviewing and categorizing transactions. This ensures everything is in order when it’s time to file taxes.

Setting up your accounting system doesn’t have to be overwhelming, and once it’s running, it pays off in saved time and fewer errors.

3. Embrace GAAP for Smarter Financials

Tech investors expect transparency, and adopting generally accepted accounting principles (GAAP) can help. For instance, instead of recording an annual insurance payment in one month, GAAP requires dividing it over the year.

This method gives a clearer picture of your financials, making it easier to analyze profitability and align with investor expectations.

Using GAAP accounting doesn’t just help with taxes—it positions your company more favorably with investors.

4. Categorize Hosting Expenses Correctly

Many tech companies use hosting services like AWS or Azure. Instead of categorizing these as software expenses, they should be labeled as “cost of services sold.”

This distinction is critical because it directly impacts your gross profit calculations. Properly categorizing hosting costs ensures more accurate financial reporting.

5. Set Up a Receipt Hub

Throughout the year, you’re likely handling countless invoices, receipts, and bills. Instead of letting them pile up in your inbox, create a dedicated email address, like receipts@yourcompany.com, to forward all documentation.

This simple system keeps everything organized and easy to access during tax season.

6. Go Accrual-Based, Not Cash-Based

Most tech startups benefit from accrual accounting, which records revenue when it’s earned (e.g., invoicing) rather than when it’s received. This approach gives a more accurate picture of your accounts payable (A/P) and receivable (A/R).

For SaaS companies, this is especially important when dealing with upfront subscription payments, ensuring your books reflect true revenue trends.

7. Work with the Right Tax Experts

Tech startups have unique tax considerations, from multiple investment rounds and stock issuance to convertible debt and R&D tax credits. Not all accountants understand the nuances of tech company finances, and choosing the wrong one can lead to costly mistakes.

The right CPA isn’t just a tax preparer—they’re a strategic partner who ensures compliance, saves money, and minimizes risks.

Our team specializes in working with startup tech companies. We’re here to help you navigate the complexities of 2024 tax filings and set your business up for long-term success.

Make Tax Season Stress-Free

Taxes don’t have to be a headache. With the right tools, strategies, and expertise, you can file with confidence and focus on growing your business. Start by tackling one of the areas above, and reach out to us for personalized help.

Let’s make your 2024 tax season smooth, simple, and successful.