Schneider Downs takes great pride in answering relevant questions surrounding startup and mature emerging technology companies.
Yes. If your company engages in research in development activities, which many technology-focused startups do, you may qualify for a research and development (R&D) tax credit.
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Yes. Early-stage companies, which generate less than $5M in gross receipts, may qualify to use their R&D tax credit to offset payroll taxes irrespective of their profit or loss.
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A best practice is to have a valuation done when equity is issued to employees and when there is a large capital raise.
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Our consultants combine practical business experience with up-to-date technical options to implement cost-effective solutions for our clients. Our association with industry-leading technology companies provides our clients with the latest industry-specific, low-risk and proven solutions. Through vendor certification programs, advanced education and industry conferences, our consultants are trained and certified on the latest products and services. Our consultants bring a variety of experiences, technical knowledge and industry certifications to our clients, providing an ongoing and effective partnership.
Learn more at www.schneiderdowns.com/adapt or contact us to get started today.
There are a lot of systems that emerging technology clients use. One software that should be implemented is an equity management system to house all equity agreements, maintain vesting schedules and calculate compensation expense.
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We get this question a lot from early-stage companies or we hear from owners that their plan is to exit via IPO. The reality is that very few early-stage companies go through an IPO as their initial exit. In a lot of cases, a more compelling exit presents itself prior to the opportunity to do an IPO. However, if you are considering an IPO there are a lot of complex, costly and time consuming, regulatory, reporting and legal requirements that must be considered prior to going this route.
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The most common issues seen in the due diligence process relate to data security, IP ownership, regulatory compliance and contract obligations with customers.
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Schneider Downs’ Accounting Advisory group can assist an organization with any accounting issues, such as:
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Schneider Downs offers three types of assurance services: compilations, reviews, and audits.
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State tax nexus can established by having remote employees in a state, having physical traditional offices in multiple states, or by exceeding a state’s economic nexus threshold which is generally an amount of sales to customers in a particular state. Remote employees can create payroll tax obligations as well as income or sales tax filing obligations; while economic nexus is generally used for sales tax or income tax obligations.
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States have varying rules of what is considered tax in the technology industry that are dependent on the types of services being offered.
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Your clients and prospects want assurance that their data and transactions are handled with integrity. A System and Organization Controls (SOC) report provides the transparency and trust needed to demonstrate your commitment to strong controls and processes. In a SOC report, auditors trained in IT controls evaluate your systems and process by inspecting evidence and documentation to verify controls are in place. The auditors produce a formal report that can be shared with clients, prospects, regulators and other interested parties about their procedures and results of testing.
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Startups are often trying to sell services to larger organizations. These types of organizations often have implemented third party risk management (TPRM) programs that require them to perform monitoring of their own vendors, particularly if the vendor receives what the organization considers sensitive data. As part of the sales cycle an organization may ask you to provide a SOC report to demonstrate you have appropriate process to protect their data. A SOC report completed by an independent third-party provides your customers and prospects assurance you are doing the right things. It also provides your company assurance that there are no gaps in the internal controls tested by the auditor.
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If you use a cloud hosting provider like AWS, Azure or GCP or other vendors to support key operations you will need to complete due diligence activities over the vendor to make sure they are maintain an appropriate internal control environment to protect your data and ensure continuity of services. Typically a SOC report is used to facilitate this process. SOC reports have a certain format that can ease the review process but requires some background. If your company has your own SOC report, your auditors will ask for evidence of your review.
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Schneider Downs understands the ever-changing landscape and business challenges facing companies focused on emerging technologies and software. Our clients represent a wide range of organizations, from emerging growth companies to large mature companies, and we are well-versed in the unique challenges they face. Our team of seasoned professionals has experience working with emerging technology companies in all phases of their evolution.
To learn more, visit our Emerging Technology page.
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Schneider Downs is a Top 60 independent Certified Public Accounting (CPA) firm providing accounting, tax, audit and consulting services to public and private companies, not-for-profit organizations and global companies. We also offer risk advisory, transaction advisory, digital consulting, wealth management, retirement plan solutions and investment banking services. Schneider Downs serves individuals and companies in Pennsylvania (PA), Ohio (OH), West Virginia (WV), New York (NY), Maryland (MD), metropolitan Washington (DC) and additional states in the United States with offices in Pittsburgh, PA, Columbus, OH, and McLean, VA.
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