Good tech may have the power to transform companies. That's probably why you may be searching for SaaS accounting and tax planning services that integrate with cutting-edge technology. Let's talk about what SaaS firms and entrepreneurs should know about the best SaaS bookkeeping strategies.
Insights Through Good SaaS Bookkeeping
One of the areas you may be struggling with is how to gain insights from revenue trends. This is especially complicated for a large number of SaaS firms because payment streams originate from both subscriptions and one-time downloads. That means you may be juggling two different sets of metrics that need reconciliation. A SaaS accountant can help you to see how the numbers look from a variety of angles. What's more, trends can be identified to fuel decisions.
The Uniqueness of SaaS Tax Planning
Your SaaS firm may look similar to any other corporate entity in the United States. However, you also might be running a firm that doesn't even have a physical office or full-time employees. The discrepancies in how SaaS businesses do business may lead to lots of tax confusion. For instance, payroll tax needs special attention if you have remote employees providing support around the country. It's also important to understand how to handle worker classification if you rely on contractors. The fact that your firm offers virtual services that can be "downloaded" from anywhere also creates some grey areas for things like multi-state taxes.
There's also the issue of handling the deduction angle of SaaS tax planning if you're deploying engineers or reps to meet with clients in person around the country. Costs of those encounters may often be claimed for deduction purposes. Usually, a SaaS firm won't just accidentally stumble into full tax compliance. This is a serious aspect of doing business that typically requires SaaS company CFO business advisory services. The good news is that fully compliant, streamlined tax intent may give a firm every advantage for reducing tax liability through strategic deductions. For instance, it's important to investigate eligibility for deductions for startup costs, capitalization of development costs, and tax credits.
One last tax issue to discuss further is the capitalization of software development costs. There is some flexibility regarding how to handle tax planning for SaaS during the period lasting from product feasibility through product release. Carefully selecting your initial method for tax planning while your business is in a growth period could help create substantial long-term tax benefits.
Things to Solidify
Revenue recognition is an important element for a large number of software companies. Each "sale" you make isn't viewed the same way for tax purposes as a tangible object would be. There are actually some very complicated and nuanced rules regarding the recognition of revenue from software sales stemming from factors like delivery methods and ongoing support. Thus, bringing in expert SaaS company financial advisers to help you make the best decisions for your business.
Do Bigger Things With Smarter SaaS Accounting
Getting real-time daily financials synced with long-term tax and financial planning may help you become more profitable regardless of volume. The SaaS financial advisers at Fusion CPA help firm owners and entrepreneurs identify these types of smart decisions by putting insights at their fingertips and offering their industry knowledge. For example, you may still be at the point where you're unsure of the best entity type to declare for your SaaS business and an expert can help you avoid major pitfalls of not following best practices in this area. So, whether you may be at a point where you need to consider things like stock-based compensation to attract better talent or you’re at the next phase of growth and you need to enhance your bookkeeping - our SaaS CPAs and financial advisers are here to help. Our goal is to help ease the processes and recommended the best tools that may define your firm for decades to come. You can learn more about our services by clicking the button below to schedule a complimentary discovery call today!
This blog article is not intended to be the rendering of legal, accounting, tax advice or other professional services. Articles are based on current or proposed tax rules at the time they are written and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive.