Accounting Tips for SaaS Startups

Brian Catibog finance header 4

Software as a Service (SaaS) is a business model focused on the delivery of software. And like any business, it has needs in accounting to make that business model run efficiently. Knowing where to start with accounting for your SaaS startup can be a difficult thing to wrap your head around.

It doesn’t help that so few states actually have concrete positions on whether or not to tax SaaS or exempt it. Knowing the financials of your SaaS company is essential regardless. There are steps that you can take before calling in the professionals, but this aspect is essential no less.

Scale Your Tax Planning

Tax compliance is one of the most important aspects of any business. Non-compliance is usually a case of shoddy bookkeeping and it can be easily avoided. When growing your business especially, compliance can be an issue. Maybe you are compliant where your business originated, but are not when you expand across state lines.

Having a tax professional in your corner can help guide you towards proper tax planning. This can help you avoid any catastrophes that could seriously set your business back and get you into trouble with Uncle Sam.

Be Aware of Extras

Maybe your company sells complementary services to supplement a core product. In that case, be aware of what fees are being charged outside of that core product. Make certain to allocate revenue based on the estimated selling price of each of those services or a fee on a stand-alone basis. 

While there are many SaaS companies that have recognized the benefits involved with doing this, there are many more that have not. Understand everything that you are charging for when factoring in your revenue for accounting.

Be Aware of Changes

Because SaaS is still uncertain from a tax standpoint, it is imperative to be aware of any changes that may be made to tax codes. Pleading ignorance won’t do you any good; staying on top of regulations and codes will.

Small businesses cannot afford to be negligent with tax codes and developing regulations can help you stay on top of those changes.

from Brian Catibog | Business

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