- Do startups pay payroll taxes?
- What is indirect tax?
- How do I know when I owe state sales tax?
- How are C Corps taxed differently than S Corps and LLCs?
- Does my startup need to file taxes if we didn't generate revenue?
- Does my startup need to file taxes if we didn't generate profit?
- Where can I find my startup's EIN?
- How do I know if my startup qualifies for R&D tax credit?
Indirect tax is a type of tax levied on goods and services, which is paid to the merchant by the consumer, and then collected from the merchant by the government. Examples of indirect taxes include sales tax, use tax, value-added tax (VAT), excise tax, and customs or import duties.
As soon as your business establishes nexus with a state you become liable for sales tax payments to that state. Nexus can be physical or economic. Examples actions that can establish physical nexus with a state include hiring team members in that state, opening offices, using fulfillment centers or data centers. Economic nexus can be established by triggers like total revenue or number of transactions in a state. The best way to be sure about our state sales tax liabilities is to contact Burkland’s tax team for a Nexus Study.
C Corps are taxed on gross income minus operating expenses at the entity level. Individual shareholders like founders and investors then pay taxes only on the dividends they receive. Individual shareholders at S Corps and LLC’s, on the other hand, are taxed on their share of the business's profit, regardless if they were paid a distribution or not. Investor-friendly taxation is a primary reason most VCs and institutional investors only invest in C Corp startups.
Yes, if your startup is a C Corp or an S Corp you are required to file business taxes even if you didn’t generate revenue.
Yes, if your startup is a C Corp or an S Corp you are required to file business taxes even if you didn’t generate profit.
Your startup’s employer identification number (EIN) is often required when doing things like filing taxes, opening bank accounts, applying for loans, hiring employees, and more. If you don’t have an EIN yet, you can apply for an EIN online through the IRS. If you’ve already received an EIN, you can find it on the confirmation letter you received from the IRS, either online or by mail. Other places to look for your EIN include previous tax returns, official IRS notices, business licenses, payroll paperwork, and bank statements. If you still can’t find your EIN you can contact the IRS for support.
The Research and Experimentation Tax Credit, (R&D Tax Credit), allows companies to deduct expenses directly related to research and development. If your startup qualifies for the R&D tax credit, you may be able to deduct up to $250,000/year in R&D expenses from your payroll tax or income tax. You can use Burkland’s R&D Tax Credit Calculator to see how much credit your startup could qualify for, and contact our tax team to request a consultation.