Business tax preparation
Most startups are Delaware C-corps, which means a specific return, specific deadlines, and a specific set of things that get missed: Section 174, the R&D credit, and a Delaware franchise tax bill that has nothing to do with income. Here's what actually goes into filing it right.
A Delaware C-corp, the entity structure virtually every venture-backed startup uses, files Form 1120, the U.S. Corporation Income Tax Return, due the 15th day of the fourth month after the fiscal year ends — April 15 for a calendar-year company. Filing Form 7004 pushes the paperwork deadline six months, to October 15, though any tax actually owed is still due on the original date.
Form 1120 prepared and filed from books that are already reconciled, not assembled from scratch at deadline.
Every filing and extension deadline tracked, so nothing gets missed because no one was watching the calendar.
Form 7004 filed when more time is actually needed, handled before the deadline, not the week of.
Books closed and reconciled ahead of filing, so the return reflects what actually happened, not an estimate.
None of that is possible to do well from a backlog. The return is a summary of what the books already say, which is why year-end close, not the filing itself, is usually where a rushed tax season actually goes wrong.
Separate from the income tax return above, Delaware charges every corporation incorporated there an annual franchise tax just for the right to be a Delaware entity, whether or not the company made any money. It's calculated using one of two methods, and Delaware automatically bills whichever produces the higher number unless the company recalculates using the alternative itself.
The default method is based on authorized share count, which can produce a startling bill for an early-stage company that authorized a large number of shares at formation without realizing the tax consequence. The other method, based on assumed par value and total assets, is usually far cheaper for a company with a large share count and modest actual assets, but it isn't applied unless someone actually runs the alternative calculation. A lot of founders just pay whatever the state's default notice says, and overpay by a wide margin without knowing it.
It's due annually by March 1, alongside a separate $50 annual report filing fee, regardless of the company's own fiscal year. Missing the deadline adds a flat $200 penalty plus 1.5% monthly interest on whatever's unpaid, and a company owing $5,000 or more in franchise tax has to pay it quarterly through the year, not as a single March payment: 40% by June 1, 20% by September 1, 20% by December 1, and the remainder by the following March 1.
If a C-corp owes tax and files late, the IRS charges a failure-to-file penalty of 5% of the unpaid tax per month or partial month late, up to 25%, plus a separate failure-to-pay penalty of 0.5% per month. When both apply, the failure-to-file penalty is reduced by the failure-to-pay amount, so the effective combined rate tops out around 5% a month, not 5.5%, but it still compounds fast on a return filed several months late.
The detail that surprises a lot of pre-revenue founders: if the company owes no tax for the year, a loss year is the norm for most early startups, there's generally no failure-to-file or failure-to-pay penalty at all. That's real relief, but it isn't a reason to skip filing. The return is still what establishes a net operating loss on the record for a future profitable year to actually use.
Since the 2018 Supreme Court decision in South Dakota v. Wayfair, most states can require a business to collect and remit sales tax based purely on sales volume in that state, with zero physical presence required. A startup selling to customers across many states, or running a distributed team, can trigger a collection obligation in a state it has never had an office or employee in.
This mostly affects companies selling taxable physical goods or certain services; a lot of SaaS and digital products are exempt in many states, though the exemptions vary state by state and change often enough that it's worth confirming rather than assuming. Ignoring nexus doesn't make the liability go away, it just accumulates quietly until a state notices and asks for back taxes plus penalties.
Two things get missed on a startup return more than almost anything else. First, the R&D tax credit, a dollar-for-dollar reduction in tax owed for qualifying engineering and product work, available even to companies without an "R&D department." Second, Section 174 capitalization: R&D costs that had to be amortized instead of deducted from 2022 through 2024, with recovery still available on an amended return for companies inside their filing window.
Most pre-revenue startups also carry a net operating loss, which doesn't disappear, it sits on the books as a real future tax asset once the company turns profitable. It's worth flagging early, since a large fundraise or acquisition can limit how much of an accumulated NOL is actually usable afterward under IRC Section 382.
The IRS expects tax paid roughly as income is earned through the year, not all at once at filing time, which is why it charges an underpayment penalty on estimated tax payments that come in too low relative to what's actually owed, even if the full balance gets paid by the return deadline. This doesn't apply to a company running at a loss, but it becomes a real quarterly obligation the moment a startup turns profitable.
Projecting a full year's income before the year is finished is inherently imprecise, which is why most companies build in a safe-harbor cushion, paying in at least as much as the prior year's total tax liability, specifically to avoid the penalty even if the current year's estimate ends up off.
This is also the point where the R&D tax credit stops being a once-a-year filing decision and starts affecting cash flow through the year: a credit applied against payroll tax reduces what actually goes out the door on the next quarterly payroll filing, not just what shows up on the annual return months later.
A startup's own tax prep starts earlier than the 1120. Form 1099-NEC has to go out to every contractor paid $600 or more during the year by January 31, and getting the contractor-vs-employee classification wrong doesn't just create a labor-law problem, it means the wrong form went out, or none did. That's a separate filing obligation from the corporate return, on its own deadline, and it's easy to miss when all the attention is pointed at April.
Any employee, including a founder on payroll, gets a W-2 by that same January 31 deadline. Both obligations run on the January calendar regardless of when the company's own fiscal year closes, which is why treating tax prep as something that starts in the spring already misses two real deadlines that came and went months earlier.
Staxiom bundles tax filing with bookkeeping rather than selling it as a standalone return, since a return is only as accurate as the books underneath it. The Tier 2 tier, bookkeeping + tax filing, starts at $500/month and includes the return itself, deadline and extension monitoring, and year-end close, on top of everything in bookkeeping-only.
A standalone CPA charging per return, with no bookkeeping included, is priced differently and doesn't carry the same incentive to keep the books current the other eleven months of the year. Full tier breakdown, including where notice and audit representation and R&D credit filing sit, is on the pricing page.
Estimated tax guidance and multi-entity strategy sit a level above straightforward return filing, and only come included once a company has moved to full advisory. For a company that's still filing a single-entity return with a straightforward loss or modest profit, the filing tier alone typically covers it; the advisory tier earns its keep once the tax picture actually gets more complicated than one clean return a year.
We know what a real return should catch because we've built the credit studies that sit behind one. One co-founder also ran EY's West Coast R&D Tax Credit practice for thirteen years.
Reconciled and closed before filing starts, not discovered mid-return.
Form 1120 and Form 7004, tracked against the real deadline, not the last week of it.
R&D credit, Section 174 recovery, and franchise tax method, checked before the deadline closes on them.
A Delaware C-corp files Form 1120, the U.S. Corporation Income Tax Return, reporting income, deductions, and tax owed at the corporate level, separate from anything on a founder's personal return. This applies whether or not the company is profitable; a pre-revenue C-corp still files, typically reporting a loss.
For a calendar-year C-corp, Form 1120 is due by April 15. Filing Form 7004 grants an automatic six-month extension, pushing the deadline to October 15 -- but that extends the paperwork deadline, not the payment deadline; any tax actually owed is still due by the original April date to avoid interest and penalties.
It depends heavily on whether tax prep is bundled with ongoing bookkeeping or bought separately. Staxiom's tax-filing tier starts at $500/month and includes both the year-round bookkeeping and the return itself, since a return is only as accurate as the books it's built on. A standalone CPA charging per return, with no bookkeeping included, is a different, harder-to-predict cost.
There's no fixed number, it depends on entity complexity and how clean the books already are going in. What's traceable: Staxiom's bookkeeping-plus-filing tier starts at $500/month for the whole year, not a one-time return fee, which is why keeping books current all year is what keeps the return itself cheap and fast at filing time.
Add your revenue and website for a full review, reviewed by a CPA who ran EY's West Coast R&D Tax Credit practice for 13 years.