We are responsible for paying Federal, State and Delaware Franchise Taxes annually. Additional taxes, such as NY State Sales Tax and Payroll Taxes are paid quarterly.
Who is responsible for our taxes?
Internal points of contact for taxes:
- CEO & Strategic Growth Lead - point of contact for tax filings and processes
- Strategic Growth Lead - NY State Quarterly Tax filing and payment
External contacts for taxes:
- Graphite Financial prepares our taxes and our team is comprised of:
- Michael Smith, Managing Director of Tax: mike.smith@graphitefinancial.com
- Ariel Vodgner, Tax Manager: ariel.vodgner@graphitefinancial.com
Some background on our team at Graphite:
Michael Smith, Managing Director of Tax: With over 30 years of experience in tax and accounting, Mike has served startups as well as large multinational companies. His expertise encompasses federal and state tax compliance, consulting, and planning across a range of industries including healthcare, life sciences, manufacturing, financial services, and technology.
Ariel Vodgner, Tax Manager: Ariel is a seasoned Tax Manager with 10+ years of expertise in public accounting. He has honed his skills in tax compliance and offers comprehensive advisory services spanning various industries. His extensive experience equips him to navigate complex tax landscapes, providing strategic insights and solutions to optimize financial structures and compliance frameworks for his clients.
How do we file our taxes?
Graphite (site link) is our tax preparer as of January 2024. They provide the following services to us:
| Included Services | |
|---|---|
| Federal Return | 1 return |
| State / City / Local Returns | Up to 5 returns |
| 1099s | Up to 25 1099s |
| Delaware Franchise Tax Annual Filling | 1 franchise filing |
| Delaware Annual Report | |
| R&D Tax Credit | |
| Additional Services | Additional State Filings, Additional City/Local Filings, Additional 1099s, Additional state annual reports, Additional K-1s, Tax Advisory, Form 5471, Form 5472 FBAR, Form 3921, Filings, Quarterly Estimates, Extension Filings, Sales Tax, Nexus Study, Sales Tax State Registrations, Sales Tax Monthly Compliance |
*Tax Advisory refers to in-depth research on tax questions. We can reach out to our contacts at any time with our questions and if there is something that requires additional research or a tax lawyer, they will let us know.
Why did we choose Graphite?
When searching for a tax provider, we prioritized the following criteria:
- Knowledgeable of startup and small business tax needs
- Year-round availability to answer questions
- Nice-to-have: ability to also prepare the R&D tax credit study
Graphite fulfilled the criteria in addition to having a seasoned tax team via a startup acquisition a year ago. That team had been working with seed to pre-IPO startups for ten years prior to the acquisition.
Details on the tax preparers we vetted in the Fractional CFO_FPA Vendors spreadsheet (focus on the Pay Schedules tab).
Annual Tax Process
| Item | Deadline | More Information |
|---|---|---|
| Kickoff | Before or during renewal | The initial kickoff call occured in Q4 after signing. We walked through our needs and how Graphite will support us over the coming months. If we continue with Graphite, it would be helpful to have this call before or during the renewal period to discuss the previous year’s process, pain points, what worked, confirm any changes to the business, etc. This will also give Graphite an opportunity to flag items for consideration and provide a preview of what to expect for the upcoming annual tax period. |
| 1099 Filing | Jan 31 | For 1099s that Graphite files, we receive a detailed step-by-step email on what is needed for the 1099 process. Graphite likes to file well before the deadline and we should have contractor information to them by the end of the first week of Jan.Graphite will notify everyone receiving a 1099 via email, that it is ready. Graphite will also share the 1099s and a status sheet. Save these files in the Shared Drive > Growth Ops > Financial Operations > Tax > [Insert Year] Income Tax |
| Tax Season Review* | Feb | Set up a call with Graphite in early Feb to walk through any changes in the tax code, required documents and ask questions first week of Feb.Graphite will send over a required docs list prior to the call.All docs should be shared with Graphite via docsend folder. Folders can be updated with current files. *Graphite does not have a specific name for this call, but this review is what happens on the call. |
| DE Annual Report and DE Franchise Tax | Mar 1 | Information collected during the kickoff and annual review will provide the Graphite team with the information needed. Once they share the report and franchise tax filing information, save the files in the Shared Drive > Growth Ops > Financial Operations > Tax > DE Franchise Tax [insert year]If in the future we should have any additional states that require an annual report or franchise tax filing, the same process applies. |
| R&D Tax Credit | Mar 15 | Graphite will try and have the tax study completed before the filing date. |
| Federal Income Tax, State Tax, Any Tax Credits, Estimated Tax Payment | Apr 15 | Graphite will try and have taxes filed before the filing date. If there is the need for an extension, Graphite will inform us either during the tax season review or when we share our documents with them. Graphite willAt the time of filing, Graphite will also make the first quarterly estimated tax payment. |
Filing for Tax Credits
As an early stage startup and a small business, there are a few tax credits from which we can benefit. Credits we are currently filing for:
| Credit | More Information | |
|---|---|---|
| R&D Tax Credit | A general business tax credit for companies that incur research and development (R&D) costs in the United States. Credit can be claimed on all open tax years (typically three). | For an overview of R&D tax credit program, see this article from Zeni and this infographic from Boast |
| SECURE ACT Tax Credit* | The SECURE Act provides a tax credit to small employers with up to 100 workers that start a workplace retirement plan, with an additional credit available if the plan includes automatic enrollment. | Almanac: 2024 Retirement Plan, SECURE Act Tax Credits |
| Small Business Tax Credit* | TBA | TBA |
*filing in 2025 for 2024 contributions and plan startup
Tax Timelines
There is a lot to remember to keep Cadence OneFive compliant with taxes and fees. Below is an overview of deadlines we need to keep track of annually.
All dates are included in the FinOps calendar in Cadence OneFive’s google calendar.
| Item | Deadline | Responsibility |
|---|---|---|
| W2s to all Employees | Jan 31 | Justworks |
| 1099s to all Contractors and e-file for 1099-MISC | Jan 31 | Justworks / Cadence OneFive |
| Delaware Annual Franchise Report | Mar 1 | Graphite |
| 1099s and W2s e-filed with IRS | Mar 31 | Justworks, Graphite |
| NY State Sales Tax | Mar 20 | Bookkeeper |
| Federal Tax Return Form 1120 |
15th day of the 4th month after the close of the tax year. Usually means Apr 15 |
Accountant |
| State Tax Return | Apr 15 Complete at the same time as Federal Tax Return |
Accountant |
| R&D Credit and Related Studies Form 6765 |
Apr 15 Submitted with Federal Tax Return |
Graphite |
| Retirement Plan Compliance Form 5500 |
Apr 15 Submitted with Federal Tax Return |
Retirement Plan Provider, Graphite |
| SECURE Act Tax Credit Form 8881 |
Apr 15 Submitted with Federal Tax Return |
Retirement Plan Provider, Graphite |
| NY Sales Tax | Apr 15 | Bookkeeper |
| NY State Quarterly Payroll Taxes | Apr 30, Jul 31 | Justworks |
| Claim and Apply R&D Tax Credit Form 8974 |
Apr 30. Jul 31 or Oct 31 | Cadence OneFive, Justworks |
| Delaware Quarterly Estimated Franchise Tax | Jun 1, Sep 1, Dec 1 | Accountant |