Accountants for Startups, SaaS and Software Businesses

The questions a founder brings are about cash, not profit: how many months of runway are left, what the R&D refund will be and when it lands, whether the next raise is priced right and what it does to the founders' ownership. An accountant who only prepares a tax return and a BAS is missing most of the job. The business is being built to a different set of numbers and the finance function has to be built the same way.

The work is a mix of compliance that has to be clean for investors, government programs that can be worth a large share of the budget, and structural decisions that are cheap to get right early and expensive to fix later. We cover all three from pre-revenue through to Series A and beyond, and we run the finance side for founders who are not yet ready to hire a finance lead.

This page covers the R&D Tax Incentive, investor and employee concessions, SAFE notes and cap tables, subscription revenue, grants and the first steps offshore.

The Research and Development Tax Incentive is the most valuable program available to an Australian startup and the one most often done badly. For eligible companies below the aggregated turnover threshold it is a refundable tax offset, which means that in a loss year it comes back as cash. Above that threshold it is non-refundable. Only companies can claim, not trusts or sole traders, and the activities have to meet the definition of core or supporting R&D activities: experimental work whose outcome could not be known in advance, conducted to generate new knowledge.

The process has two halves. The R&D activities are registered with AusIndustry, which administers the program jointly with the ATO, within the registration deadline after the end of the income year. The offset is then claimed in the company's tax return. Both halves depend on contemporaneous records: a hypothesis, the experiments, the results, and the time and costs attributed to each activity, kept as the work is done. Claims reconstructed after the fact from a developer's memory are the ones that fail review.

We help founders set up the record keeping at the start of the year, separate the activities that qualify from ordinary development, prepare the registration and the claim, and manage any AusIndustry or ATO review. We also build the expected refund into the cash flow forecast, because its timing often decides whether a raise is needed before or after.

• Eligibility assessment of the entity and the activities
• Contemporaneous record keeping systems for R&D activities and costs
• AusIndustry registration prepared and lodged on time
• R&D tax incentive schedule in the company tax return
• Overseas R&D and advance findings where work is done offshore
• Review and audit support

Investors in an early stage innovation company can receive a non-refundable tax offset on their investment and a capital gains tax exemption on the shares if they are held for the required period. For a startup that qualifies, ESIC status is a genuine advantage when raising from angels. Qualifying depends on an early stage test, based on the company's age, expenses and income, and an innovation test met through a points system or a principles-based assessment. We assess eligibility, document it and prepare the reporting the company must lodge with the ATO about investors who received new shares.

Employee share schemes are how startups pay people they cannot yet afford. The startup concessions in the ESS rules allow eligible companies to issue options or shares to employees at a discount without the employee being taxed on the discount up front, provided the company and the scheme meet the conditions on age, turnover, listing status and the terms of the offer. Get the conditions wrong and employees face tax on a benefit they cannot sell.

We help design the scheme with the company's lawyers, value the shares for the offer, maintain the ESS register and prepare the annual ESS statements and reporting.

Most Australian startups now raise their first money on SAFE notes or convertible notes rather than priced equity. They are quick, but they are not simple. Each note has a valuation cap or a discount or both, some have most favoured nation clauses, and when they convert at the next priced round the dilution to founders is often larger than anyone modelled. We keep a cap table that shows the fully diluted position after every note converts and every option vests, and we model the next round before the term sheet is signed.

The accounting matters too. SAFEs and convertible notes have to be classified correctly in the financial statements, the money raised is not revenue, and investors in later rounds expect properly prepared accounts. Founders who come to a raise with clean Xero files, a reconciled cap table and a credible forecast get better terms than those who do not.

Burn rate is how much cash the company loses each month. Runway is how many months are left. Every founder knows those two numbers roughly; our job is to make them exact and show what moves them: the R&D refund, the next hire, a pricing change, a churned customer. We build a rolling forecast that is updated monthly and that the board can rely on.

Subscription revenue has its own recognition rules. An annual plan paid up front is cash today and revenue over twelve months. The accounts should show recurring revenue, deferred revenue, churn and net revenue retention, which are the metrics investors actually price. GST on software sold to Australian customers is straightforward, but sales to overseas customers are usually GST-free, and overseas subscription sales may trigger registration obligations in the customer's country once they pass local thresholds. The billing platform has to be set up to handle both.

Our virtual CFO service covers all of this for startups that are not yet ready for a full-time finance lead: board reporting, investor updates, forecasting and the finance side of the next raise.

Beyond the R&D Tax Incentive, Australian startups can access a range of federal and state grants, accelerators and commercialisation programs, and Queensland runs its own. Most are competitive, most have milestones and acquittal requirements, and almost all require financial statements and forecasts prepared to a standard. Grant income is generally assessable, and some programs interact with the R&D claim, so the two need to be planned together.

The Export Market Development Grants program reimburses part of the eligible spend on promoting products and services to overseas markets. The rules on who is eligible, what spend counts and how the grant is tiered have changed in recent years, so we check the current program guidelines, assess eligibility, help assemble the application and record the spend so it is claimable.

Many software businesses sell overseas before they sell at home. The first steps offshore raise questions that are easy to ignore and expensive to fix: whether a United States subsidiary is needed for customers or investors, which entity owns the intellectual property, how the Australian company and the overseas company charge each other for development, sales and support, and where the profit ends up.

Transfer pricing is the set of rules that requires transactions between related entities in different countries to be priced as if they were between independent parties, and documented. It applies to startups, not just multinationals, as soon as there is a second entity. The common structures, an Australian company doing the R&D and licensing the product to an offshore sales entity, or an offshore parent with an Australian development subsidiary paid on a cost plus basis, each have tax, R&D and investor consequences. The R&D Tax Incentive, for example, is only available to eligible Australian entities, and moving intellectual property offshore can affect it.

We help founders choose the structure before the first overseas customer or investor forces one on them, prepare the intercompany agreements and transfer pricing documentation, and work with advisers in the relevant country. We are based in Victoria Point in the Redlands, with a second office in Jimboomba, and most of our startup clients work with us entirely by video.

• Australian holding company and subsidiary structures for raising
• Overseas subsidiary set-up decisions and timing
• Intellectual property ownership and licensing between entities
• Intercompany agreements and transfer pricing documentation
• Foreign GST and sales tax registration for software sales