Navigating U.S. tax obligations is one of the most critical—and complex—challenges for any new business. Startup Tax Compliance refers to the process of understanding, setting up, and adhering to all federal, state, and local tax rules specific to your new venture. It’s not just about filing an annual return; it’s about building a proactive system that avoids penalties, maximizes savings, and supports sustainable growth.

Without proper setup, startups risk severe penalties, cash flow disruption, and personal liability.

How to Achieve Startup Tax Compliance: A Step-by-Step Framework

1. Entity Formation & Tax Election
The first decision sets your tax trajectory. We guide you through the implications of each structure:

• Sole Proprietorship/LLC (Disregarded Entity): Pass-through taxation to your personal return (Schedule C).
• S-Corporation (S-Corp): Pass-through taxation with potential for self-employment tax savings.
• C-Corporation (C-Corp): Separate corporate tax return (Form 1120), subject to corporate tax rates.
• Partnership: Pass-through taxation via Form 1065 and K-1s to partners.

We help you choose the optimal structure and file the necessary formation documents and elections (like Form 2553 for S-Corp status).

2. Foundational Registrations & Setup

• Employer Identification Number (EIN): Your business's federal tax ID, required to open bank accounts and hire employees.
• State Tax Registrations: Sales tax permit, payroll tax account, and state income tax registration as required.
• Accounting Software Implementation: We set up your chart of accounts and bookkeeping system (e.g., QuickBooks) correctly from the start.

3. Ongoing Compliance & Filings
Compliance is continuous, not annual. We manage the calendar so you don’t miss a deadline:

• Payroll Tax Filings & Payments: Federal (Forms 941, 940) and state withholdings and unemployment taxes.
• Sales & Use Tax: Collection, reporting, and remittance to state/local authorities.
• Quarterly Estimated Tax Payments: For owners to avoid underpayment penalties.
• Annual Business Tax Returns: Preparation and filing of the requisite federal and state returns (1120, 1120-S, 1065, etc.).
• Investor Reporting: Issuing accurate K-1s or other statements for stakeholders.

4. Strategic Tax Planning & Credits
We proactively identify opportunities to reduce your tax liability and improve cash flow:

• R&D Tax Credit: Monetize your development activities, even if you're pre-revenue.
• Section 174 Capitalization: Navigating new rules for software development and research costs.
• Startup Cost Deductions: Optimizing the write-off of organizational and initial expenses.
• Equity Compensation Guidance: Tax implications of issuing stock, options (ISOs/NSOs), and SAFE notes.

Why Choose Prestivo Tax for Your Startup’s Compliance?

At Prestivo Tax, we are more than just preparers—we are strategic partners built for the startup ecosystem.

• We Speak Your Language. We understand burn rates, funding rounds, cap tables, and 83(b) elections. Our advice is grounded in the reality of startup finance.
• Proactive, Not Reactive. We build compliance into your operations from inception, preventing costly mistakes before they happen. We provide a clear compliance calendar and own the process.
• Technology-Enabled Efficiency. We leverage best-in-class cloud accounting and tax software, giving you real-time financial visibility and seamless document sharing.
• Scalable Partnership. We grow with you. From sole founder to funded team, our services scale to provide the right level of support at each stage, avoiding the costly transition from a basic bookkeeper to a complex corporate firm.
• Defensible Accuracy. Our work is meticulous and audit-ready, giving you, your co-founders, and your investors confidence in your financials during due diligence and beyond.

Your startup's potential is limitless. Don’t let tax complexity be its constraint.

Choose Prestivo Tax to build a compliant, strategic financial foundation. Contact us to schedule a startup tax strategy session and secure your path forward.