Although crowdfunding may be a viable way of funding your new company, the IRS will want their portion. Here at Fusion CPA, our small business accountants recommend working with a seasoned accountant at the beginning to determine how you'll deduct expenses. You may need to partner with a CPA experienced in crowdfunding to assist you with, organizing your funds, setting up proper business bank accounts, and linking them to the best accounting and project management tools for your specific venture. Still, it does not stop there. Let's review some tax planning and accounting fundamentals for crowdfunding.
The Proper Set-up: Crowdfunding Startup Tips
As we mentioned above, it may be advantageous to hire a crowdfunding CPA to assist you with your business plan from the beginning. They should be able to help you outline all of the financials you'll need from the incubation stage forward and may help you determine what your goal is for fundraising.
You should also place emphasis on crowding tax planning earlier on. This may ensure that you begin setting aside the right amount for taxes as you build your company/ or manage your investment. Crowdfunding financial advisers that have experience in advising in the area of startup costs and tax planning may be helpful to partner with as you build everything into your total needed to raise funds.
Our team of seasoned accountants offers bookkeeping services for crowdfunding projects. As a top-tier accounting experienced firm, we offer expert assistance to help build your campaign from the ground up. We have experience working with individuals on crowdfunding accounting and financial management in several aspects, including crowdfunding CFO business advisory. Part of our CFO advisory service is recommending the best software or platforms to use to keep records for your specific project. As funds are allocated to expenses, you should be tracking every dime, so getting the right advice on daily operations, as well as quarterly support, may be vital to your success.
Special Tips for Crowdfunded Investments
If you are an investor, you may be able to write off donations made to crowdfunding agencies that are certified 501 (3) (C) organizations. However, if you donate money to a crowdfunding exploit that is for a private individual, you may not be able to claim the deduction. Working with a tax advisor can help sort out any tax-deductible issues.
Basic Taxation Considerations for Crowdfunding Companies
Crowdfunding tax planning is perhaps one of the most important issues. Don't forget to sit down and review all of the details of your campaign as funds come in. You should have a complete financial road map, including the following:
- Funding to start your venture
- Funding to set up payroll
- Current expenses
- Expenses that are projected
How to Manage Crowdfunding with Proper Accounting
We generally encourage our clients not to wait until launch to get advice, implement a tax planning strategy, or chose accounting software. Waiting may lead to costly services that require accountants to dig through months or even years of transactions and data to organize your books and help you file taxes. If you are launching a crowdfunding campaign, you should first set up a foolproof plan from start to finish. This means that your initial funding, setting up an account, and keeping track of all investments made into your company/ or investments made into other crowdfunding companies, and many more functions. We at Fusion CPA have years of experience working with those who desire crowdfunding to start their business or are seeking to make crowdfunded investments. We are knowledgeable of all the IRS tax rules and regulations related to crowdfunding. There is still a substantial amount of grey area around crowdfunding taxation, so we are here to help answer your questions. 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.