PodcastsThis Week in StartupsAvoiding Accidental Tax Fraud | Startup Finance Basics w/ Kruze's Scott Orn | E1849

Avoiding Accidental Tax Fraud | Startup Finance Basics w/ Kruze's Scott Orn | E1849
This Week in StartupsThu Nov 16 2023
Employee Retention Credit (ERC) Fraud:
- The ERC was a COVID-era stimulus aimed at helping companies affected by the pandemic.
- There are two versions of ERC: one for startups established after February 15, 2020, and another for companies impacted by government mandates or shutdowns during the pandemic.
Risks of Unscrupulous Practices:
- Startups have been targeted with misleading claims about receiving substantial amounts through ERC, even when they may not be eligible.
- Companies engaging in fraudulent practices related to ERC could face serious consequences from the IRS, including fines and potential closure.
Importance of Professional Guidance:
- Startups are advised to seek advice from reputable CPAs or accounting consultancies like Kruze Consulting to navigate complex tax credits and ensure compliance.
- The complexities of various tax credits such as R&D tax credits require expert evaluation to determine eligibility and avoid legal risks.
Accounting Basics for Startups:
- Founders are urged to prioritize proper accounting practices from day one, investing around $500-$600 per month initially for basic accounting needs.
- Comprehensive financial management is essential, especially considering factors like state taxes, franchise taxes, payroll considerations, and annual returns.