Your startup just hit $500K in revenue – congratulations! But along with that milestone comes a tax reality check: suddenly you’re juggling R&D credits, stock options, multi-state compliance, and quarterly estimated payments.

Your freelance bookkeeper is overwhelmed, and TurboTax is asking questions that feel like they’re written in another language.

At this stage, you don’t just need someone to file your return — you need a CPA who knows startups. One who understands that running a SaaS company with remote employees and fundraising plans is nothing like running the café down the street. The right CPA can help you keep more of every dollar, avoid costly mistakes, and set your company up for growth.

When a Generalist CPA Isn’t Enough

Many founders pick their CPA the same way they’d pick a dentist: whoever’s nearby and available. That can work fine for a while, but as your company scales, a generalist CPA often isn’t equipped for the realities of startup growth.

Take Umut, founder of a $1.2M SaaS startup with 12 employees across three states. His CPA treated the company like a traditional small business — missing $45,000 in R&D credits because they didn’t realize software development qualifies. When Umut raised Series A funding, his CPA couldn’t advise on the tax impact of employee stock options, forcing him to scramble for specialist help in the middle of a critical growth period.

Tax Preparation vs. Strategic Tax Planning: A generalist CPA can file a return. A startup-focused CPA does more: they help you plan. Strategic tax planning means spotting the credits you qualify for, structuring equity compensation the right way, and advising on timing decisions that affect cash flow and fundraising. 

As Town’s Head of Tax, Anjum Tunuli, puts it: “The real value isn’t in compliance — it’s in keeping startups from leaving money on the table.”

When startups rely on generalist CPAs, they tend to lose out in three ways:

• Missed startup-specific deductions and credits.

• Limited guidance on growth-stage decisions like fundraising or stock option plans.

• Gaps in handling the compliance complexity that comes with scaling quickly.

What Makes a CPA Right for Startups

A startup-focused CPA brings more than technical know-how — they understand the unique mix of rapid growth, equity complexity, and constant change that comes with building a venture-backed company. Here are the qualities to look for:

Startup-Specific Experience: Your CPA should know the tax challenges startups face inside and out. That means experience with R&D credits for technology development, equity compensation planning, multi-state registration requirements, and the tax implications of fundraising rounds. For example, in 2025 the IRS doubled the payroll offset limit for the R&D credit to $500,000 — a startup-focused CPA knows how to capture and apply that benefit correctly.

Entity Structure Planning: One of the most important early decisions is how to structure the business: LLC, S-Corp, or C-Corp. Each comes with trade-offs in taxes, ownership, and fundraising potential. A CPA who understands startup trajectories can explain the difference, model the tax outcomes, and help you choose the path that saves money now while keeping the door open for future investors.

Year-Round Availability: Startups don’t operate on a “see you in April” tax calendar. When you’re deciding whether to expense or capitalize software development in July, or weighing an equipment purchase in November, you need quick guidance — not a voicemail box.

Multi-State Expertise: Remote employees, customers across multiple states, and geographic expansion all create complex compliance issues. A startup CPA understands when activities create nexus, how to handle state-specific R&D credits, and how to coordinate filings across jurisdictions without slowing you down.

Bookkeeping Integration: Clean books are the foundation of smart tax planning. The best CPAs work hand-in-hand with your bookkeeping system (or provide one in-house) to make sure the numbers are accurate and actionable. 

As Anjum Tunuli often points out, “If the books aren’t clean, even the smartest tax planning falls apart.”

Red Flags to Avoid

Not every CPA is the right fit for a startup. Watch out for these warning signs:

The Disappearing Act: If your CPA only surfaces at tax time, that’s a problem. Startups need proactive guidance year-round on things like timing R&D expenses, equity compensation elections, or how new 2025 rules (like the higher mileage rate or changes to state tax thresholds) affect cash flow.

One-Size-Fits-All Approach: Be wary of CPAs who treat your software startup like a corner bakery. Your equity plans, software development costs, and investor reporting needs require specialized knowledge.

Lack of Technology Integration: Your CPA should integrate smoothly with modern accounting systems like QuickBooks Online or Ramp, connect with your payroll provider, and use automation to streamline compliance — not bury you in spreadsheets and paper forms.

No Growth Mindset: If your CPA never asks about your hiring plans, fundraising timeline, or expansion into new states, they’re not thinking ahead. A startup-focused CPA should be scanning for future tax challenges before they hit your desk.

Essential Questions to Ask Potential CPAs

The right CPA won’t mind tough questions — in fact, their answers should give you confidence they understand startups like yours. Here’s what to ask:

About Their Startup Experience

• “How many startups like mine do you work with?” Look for specific industry and stage experience. A CPA who mostly serves established businesses may not understand your needs.

• “Can you walk me through how you’d handle R&D credit calculations for software development?” The 2025 IRS rules are complex, and you want someone who knows them cold.

• “What’s your experience advising companies through fundraising rounds (angel, seed, Series A)?” Fundraising is one of the biggest tax events in a startup’s life — you need someone who can anticipate investor reporting requirements, equity implications, and cash flow considerations.

About Their Service Model

• “How quickly do you respond to questions outside of tax season?” You need answers in hours, not weeks.

• “Do you provide quarterly check-ins and proactive planning?” Great CPAs don’t just file returns — they help you minimize what you owe through smart timing and planning.

About Their Technology and Process

• “How do you integrate with our accounting and payroll systems?” Efficiency matters when you’re focused on growth.

• “What’s your process for handling multi-state compliance as we scale?” This reveals whether they really understand the tax traps of remote teams and national expansion.

The Real Cost of the Wrong Choice

Choosing the wrong CPA costs more than just fees.

Melanie, founder of an e-commerce company, spent two years with a CPA who didn’t understand inventory accounting methods. When she finally switched to a startup-focused firm, they identified $15,000 in annual savings by optimizing her inventory valuation approach — and uncovered three years of missed deductions worth $32,000.

Beyond the immediate financial hit, the wrong CPA slows your growth. Instead of getting strategic advice, you’re stuck explaining your business model or scrambling to find outside help during critical moments like fundraising or expansion. And with new 2025 rules — such as tighter reporting thresholds and increased IRS scrutiny on inventory and multi-state compliance — those mistakes can become even more costly.

Staying Current: 2025 Tax Changes That Matter for Startups

The tax code is always changing, and 2025 brought some big updates. A startup-focused CPA doesn’t just track these — they help you put them to work for your business. These aren’t small technicalities — they directly affect your cash flow, hiring plans, and even your fundraising strategy.

• Enhanced R&D Credit Benefits: Startups can now offset up to $500,000 of payroll taxes with R&D credits (double the previous cap). For a team building software or hardware, that’s real cash flow back in your pocket.

• Mileage Rate Increase: The standard business mileage rate jumped to 70 cents per mile in 2025. A savvy CPA makes sure you capture every deductible mile — especially if your team is traveling for sales, customer visits, or conferences.

• Social Security Wage Base: The maximum subject to Social Security tax rose to $176,100. For startups scaling their payroll, this affects both compensation planning and budgeting.

• Retirement Plan Credits: Small employer retirement plan startup costs remain eligible for up to $5,000 in credits for three years. That’s a strong incentive to roll out benefits that help attract and retain top talent.

• QSBS Expansion: The Act of 2025 also expanded Qualified Small Business Stock rules — founders and early investors may exclude even more gain on stock held long term. The right CPA makes sure your company is structured to qualify.

As Anjum Tunuli notes, “These updates aren’t just trivia — they change the math on hiring, spending, and even fundraising. If your CPA isn’t flagging them, you’re at risk of missing out.”

What Great Startup Tax Support Looks Like

The right CPA relationship feels less like a vendor and more like a tax department on your team. They know your business model, respond quickly to questions, and surface insights before you even realize you need them.

That means:

• When you’re considering a major equipment purchase, they already have a Section 179 vs. bonus depreciation analysis ready.

• When you’re planning a new hire in another state, they flag the payroll and income tax implications before you sign the offer letter.

• When you’re mapping out equity compensation, they guide you through 83(b) elections and option timing so your team isn’t hit with surprise taxes.

This is the difference between filing returns and shaping outcomes. As Anjum Tunuli often says, “A great CPA doesn’t just keep you out of trouble — they help you build wealth inside your company.”

That’s why at Town, our startup tax team is built around specialists — people who know R&D credits, equity compensation, and multi-state compliance inside and out. Paired with technology that keeps your books clean and your filings seamless, you get the kind of tax support that feels more like an in-house department than an outside vendor.

How to Make Your Decision

Finding the right CPA isn’t about scanning résumés — it’s about matching their expertise to your startup’s actual needs. Here’s how to approach it:

1. List your specific challenges. Do you have employees in multiple states? Are you claiming R&D credits? Do you have complex equity structures? These answers frame the expertise you need.

2. Interview with intention. Don’t just ask about credentials — ask for examples. A strong CPA should be able to tell you how they’ve helped other startups capture missed credits, optimize equity plans, or navigate fundraising rounds.

3. Look for proactive thinking. The best CPAs don’t stop at compliance. They suggest timing strategies, entity structure optimizations, and cash flow planning before you even ask.

4. Check integration. Make sure they work smoothly with your bookkeeping, payroll, and cap table systems. Clean data makes everything else faster and more accurate.
   
   
   

The right CPA focuses on the handful of rules that actually move the needle for your startup — and helps you use them to your advantage.

Take Action Today

Step back and ask yourself:

• Are you getting proactive advice, or just tax filings?

• Does your CPA understand the challenges of scaling a startup — from R&D credits to multi-state compliance to equity planning?

• Do you feel confident you’re capturing every credit and deduction available?

If you’re not answering “yes” with confidence, your startup could benefit from stronger tax support. The right CPA doesn’t just keep you compliant — they help you keep more of what you earn and plan with confidence as you grow.

At Town, we pair expert CPAs with AI to deliver big-business tax strategy to growing startups. Whether you’re raising your next round or just want to stop leaving money on the table, we’ll help you get there.

This content is for educational purposes only and does not constitute personalized tax advice. Tax laws are complex and subject to change. Individual circumstances can vary significantly, and strategies that work for one taxpayer may not be suitable for another.