Accounting & Tax Services for IT, Software & Tech Services
Subscription revenue recognition, R&D credits, and multi-state remote payroll for software and tech businesses.
What Makes the Books Different in IT, Software & Tech Services
Subscription and multi-year contract revenue doesn't get recognized when the cash hits your account - it gets recognized as the service is delivered over the contract term. Getting this wrong overstates or understates your income depending on your billing cycle, and it's one of the first things a lender or investor will check.
The R&D tax credit is real money left on the table by a lot of small software companies that assume it's only for large corporations. It's not - but Section 174 now requires certain R&D costs to be capitalized and amortized rather than deducted immediately, which changes the near-term tax math even when you do qualify for the credit.
Contractor versus employee classification for remote developers gets scrutiny, especially when someone works full-time hours for you long-term but is paid as a 1099. State-level rules on this vary and don't always match federal guidance.
Economic nexus rules mean you can owe sales tax on SaaS sales in a state without ever setting foot there, purely based on revenue or transaction volume from customers in that state. Which states tax SaaS at all, and how, varies enough that this needs an actual state-by-state check, not an assumption.
If you're compensating with equity or stock options, that needs to be accounted for correctly from a tax and bookkeeping standpoint from the first grant, not cleaned up retroactively when someone exercises or the company raises a round.
How We Help
Compliance & Licensing
We track economic nexus thresholds for SaaS sales tax across the states your customers are in, and help you register only where you've actually crossed a threshold.
Bookkeeping & Clean-Up
Subscription revenue recognized over the contract term rather than at billing, deferred revenue tracked correctly, and contractor payments reconciled against 1099 requirements.
Tax Planning
We evaluate R&D credit eligibility, plan around Section 174 capitalization requirements, and review multi-state payroll exposure from remote employees.
Tax Return Preparation & Filing
Returns prepared with deferred revenue, R&D credit calculations, and multi-state nexus positions reconciled before filing, not discovered after.
Payroll
Multi-state payroll set up correctly for remote employees, with contractor versus employee classification reviewed against both federal and state standards.
CFO Advisory & Consulting
Burn rate and runway reviews, pricing and margin analysis by product line, and entity/equity structure planning ahead of a raise or exit.
Choosing the Right Entity
Founders often start as an LLC and convert to a C-corp once outside investment or equity compensation is on the table, since most investors expect a Delaware or similar C-corp structure. If you're not raising outside capital, an S-corp can be the more tax-efficient route - we'll walk through both before you commit.
Explore S-Corp ElectionFrequently Asked Questions
When do I recognize revenue on an annual subscription - when it's billed or over the year?
Over the year, as the service is delivered, with the unearned portion sitting on your books as deferred revenue. Recognizing it all at billing overstates your income for that period.
Do I qualify for the R&D tax credit if I'm a small software company?
Possibly - the credit isn't limited to large companies, but qualifying activity has to be documented, and Section 174 now requires some of those costs to be capitalized and amortized rather than deducted right away. We'll assess your actual development work against the criteria.
My developers are all 1099 contractors - is that a problem?
Not automatically, but if someone works full-time hours for you long-term, is fully directed by you, and looks like an employee in every way except the paperwork, that's a real classification risk. We'll review the actual relationship.
Do I owe sales tax on my SaaS product in states where I have no office?
Possibly, if you've crossed that state's economic nexus threshold based on revenue or transaction count. It varies by state and by whether that state taxes SaaS at all - we check this specifically rather than assuming either way.
Ready to Talk About Your Books?
Tell us where things stand and we'll tell you honestly what needs attention first.