3 WAYS TO START PREPARING FOR NEXT TAX SEASON
- Identify a contract CPA to hire in advance.
- Maintain accurate financial records and documents.
- Adopt AI accounting tools.
Staying on top of tax and financial statement filing responsibilities can seem out of reach for many startups. Experts estimate that roughly 80 percent of early-stage companies don’t have a CFO, relying instead on their VC backers or banks until they get past Series B or C funding. With permanent staffing out of reach and growth prevailing as a top priority, startup leaders may understandably feel unprepared to tackle tax compliance and monthly financial statement closings.
However, these same companies have a breadth of resources at their fingertips to get their financial statements and tax filings in order and simplify workflows long-term – from collaborating with international talent partners to pursuing thoughtful AI automation.
Find a CPA to Hire on Contract
Bringing on full or part-time accounting staff is usually out of reach for startups, especially when you consider added costs of the recruitment, onboarding, training and turnover amid the ongoing CPA and experienced accountant shortage. When tax filing deadlines approach, early-stage companies also don’t have the time to engage in a thorough vetting and hiring process, and sacrificing expertise is not an option.
Tapping into remote CPA talent pools is an economical way to access quality advice without the expensive price tag. Working with talent sourcing partners typically comes at a fraction of the cost of full-time hires. For instance, hiring a full-time employee in California could cost upwards of $80,000 a year, but working with international CPA partners on a contract basis could be half as much, with access to an even higher quality of expertise.
Most client accounting services can be delivered remotely, including but not limited to:
- Preparation of state and federal income tax returns and property tax returns.
- Bank reconciliations.
- Accounts receivables and payables.
- Cash applications.
- Financial statement preparation.
- General bookkeeping.
HOW TO FIND THE RIGHT CONTRACT CPA
Business leaders tend to hesitate on outsourcing sensitive financial processes, but they should instead view international talent partners as an extension of their team. When it comes to finding a reputable collaborator, look for the following:
Ironclad Data Security
The sensitivity of financial records goes without saying, so it is paramount that startups work with teams that have sophisticated data security measures in place. Ideally, you select a provider that uses a secure platform to ensure client data does not leave the U.S. You can trust that your confidential information is in safe hands stateside.
Staff Transparency
No one wants to work with a faceless name, so it is important to seek out partners that offer a direct connection with their international team members and afford you the opportunity to interview candidates. You will have more confidence in their expertise and feel comfortable delegating additional tasks to save your team’s time and resources.
Advanced Tax and Accounting Knowledge
Beyond the U.S. tax code, it is imperative to work with partners that are up to date on the latest IRS guidelines. For instance, the guidance around claiming the R&D Tax Credit has changed dramatically in recent years. With early-stage companies engaging in a wide range of qualifying activities, they need a partner that truly understands this nuance and can provide strategic advice.
Adopt AI Accounting Tools
With the rapid advancement of generative AI solutions for virtually every business use case, startups should also evaluate adopting these tools for their tax and accounting processes. This could include something as simple as automating financial data entry to eliminate some of the operational groundwork or fill short-term staffing gaps.
However, it is important to maintain accurate records and robust processes before adding automation into the mix. Startups can easily put themselves at risk if they add AI into their accounting workflows too soon, but pairing this technology with remote talent partners can set business leaders up for long-term efficiency and effectiveness.
Don’t Put Off Tax Preparation for Next Season
Getting your tax filings organized should be a core business priority for all early-stage companies. While next year’s taxes seem like a long way off, it’s not too soon to start preparing. Organize your financial records and consider adopting an AI tool to assist you with bookkeeping. This will also make it easier to onboard a contract CPA when next year’s tax filing date looms.
Not only is staffing support and AI tech more accessible than ever before, but the risk of having financial loose ends is too high given how competitive the funding landscape is these days.
