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Summing It Up

Keeping you ahead of the curve with timely news & updates.


Joe Burwick, CPA

Recent Posts

What to Prepare for and Expect From Your First Meeting About the R&D Tax Credit

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New call-to-actionDid your company develop any new products for the year? Make significant enhancements to products or processes? If you’re in financial management in any way in your company, you owe it to yourself and your firm to investigate if you qualify for the Research & Development (R&D) Tax Credit.

If you rely on the hard sciences or use technology in your business to create or improve products or processes, you might be able to reduce your federal taxes by a portion of the related costs incurred.

Investigating your eligibility for the credit includes an initial meeting with an R&D credit expert. What should you prepare for your initial meeting? Expect to be able to provide the following:

Access to Key Personnel Who Were or Are Involved in the R&D Activities

This might be one person or multiple individuals depending on your company size. In bigger companies, a team approach can often foster a better discussion, bringing ideas together and identifying other areas where one or more individuals in the company might be engaged in R&D activities.

Your key personnel must be available for meetings and interviews, and should also be able to identify who performed R&D-type work during the year and be able to assist in quantifying their time spent in this work. The identification should include both internal resources (employees) and external resources (outside contractors).

We have had great success with three to five attendees in these meetings with our clients, often one person from finance and others from the R&D activities.

Internal Documentation Concerning Your R&D Activities

Any contemporaneous documentation that monitors the activities qualifying as research activities will help to support the claim for the R&D credit. The more you can share the better—it’s less documentation that we the consultants have to do, and it will reduce the time R&D personnel spend with us on interviews and in other meetings. Examples might include blueprints or marketing materials, project write ups, status reports, modifications, etc. Detail highlighting unique features of your R&D is also generally very helpful. A product catalog with only pictures won’t be sufficient enough to stand on its own.

We understand that you probably won’t have all of this information at the initial meeting, but the more you have the better. As the R&D study progresses, we will work with company personnel to complete the information.

Your documentation should include financial information. Wages (box 1 of Form W-2) is usually the most important part of your potential R&D credit financial information. This includes wages paid to employees directly involved in R&D and employees in direct supervision or support of R&D.

Recording of your R&D activities to separate accounts is helpful. For example, bifurcating R&D material and supplies (property eligible for depreciation is excluded) and non-R&D materials and supplies saves time and effort at year’s end when calculating the credit.

The same point holds true regarding separate accounts for outside contractors for work in any of the four parts. In addition, copies of contracts with outside contractors showing who retains rights is important. As this can be a significant expenditure for many companies, copies of your larger contracts also help at initial meetings.

If you use a job-time tracking system, codes to signify R&D work vs. non-R&D work will assist in determining the project list and qualifying costs at the end of the year. If you don’t use a job-coding system, each eligible employee should keep a list of projects that may qualify for the R&D credit. (Some companies keep a simple Word document to track monthly R&D-related financials.)

If you find you need to retrofit your internal R&D documentation, you can begin to go back and build the records with a list of projects that your teams worked on that you believe are R&D. You will also need a list of employees in R&D with reasonable estimates of how much time they spent on the R&D projects, along with any other materials or outside contractor costs.

Open Communication

New call-to-actionAfter our initial meeting all parties should practice timely follow up to questions, within a week generally. There must also be full disclosure of activities, especially work performed within the U.S. versus outside of the U.S. Only the former can qualify for the R&D credit.

Talk to our experts about your business' potential to claim the R&D credit today.

For more insight, observations and guidance on the R&D Tax Credit, visit our Freed Maxick Guide to the Federal Research and Development Tax Credit webpage.

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The Tax Implications of DOMA

The Supreme Court’s decision on DOMA and Prop 8 is not only a civil rights win for same sex couples- it’s a financial win for many.

In an unprecedented event last week, the Supreme Court ruled that the 1996 Defense of Marriage Act (“DOMA”) singled out same-sex marriage and treated same-sex couples "as living in marriages less respected than others." This week’s ruling will now give same-sex couples many of the same benefits (and in some cases, drawbacks) as any other married couple in the eyes of the law. Married same-sex couples in a dozen states and the District of Columbia will now be eligible for more than “1,000 spousal benefits previously off limits under DOMA.” And the court's other decision on Wednesday, striking down California's Prop 8, paves the way for same-sex marriages to resume in that state.

Key Aspects of the DOMA Ruling Include:

  • Income tax: Same-sex couples will now be able to file their federal income taxes jointly. For many couples -- especially those where one person earns significantly more than the other -- merging incomes for tax purposes will result in big savings. In addition, many education benefits, such as the American Opportunity Tax Credit and Lifetime Learning Credit, are now available to the spouse in a same-sex marriage where one spouse pays for qualified expenses of the other. 

  • Health insurance: Some same-sex couples pay income tax on imputed income for the medical benefits one partner receives through the other's health insurance plan; this will now likely change. Meanwhile, many federal employees will likely be granted spousal benefits like partner health insurance.

  • Estate and Gift tax: Same-sex couples will also be exempt from gift tax when transferring assets to each other. Under DOMA, any gift between same-sex spouses of more than $14,000 (the 2013 annual gift tax exclusion) began utilizing the lifetime exclusion limit of $5.25 million-- after which tax was assessed on gifts exceeding the exclusion. Opposite-sex couples have never been subject to that tax.  Same-sex couples will also be eligible to “split” gifts to take advantage of a doubled annual gift tax exclusion ($14,000 above x 2 married individuals or $28,000 for 2013)  In addition, the unused lifetime exclusion of the decedent spouse is now portable and will allow the estate of the surviving spouse to utilize it. 

  • Social Security benefits: Same-sex couples will now be eligible for the same federal tax treatment and Social Security benefits as opposite-sex couples in the event that one spouse passes away. This means a surviving spouse will be eligible for Social Security survivor’s benefits and will be exempt from the federal estate tax on assets exceeding $5.25 million. Note: In states where same-sex marriage is banned, this issue still has to be sorted out as the Social Security Administration has based these benefits on the state of residence. 

While many will receive the benefits of this ruling; they will also receive its downside. For example, same-sex couples who divorce may be subject to the federal gift tax when dividing assets, or be partially responsible for the back taxes of the divorcing partner.  Also, same-sex married couples will now have to file as either married filing joint, surviving spouse or married filing separate.  Thus, the “marriage penalty” will impact some same-sex couples.  

What the decision doesn't do: While many specifics of the Supreme Court's ruling are still blurry, it appears that couples must be married at a state level for all of these federal benefits to apply -- meaning domestic partnerships and civil unions don't qualify. It's also unclear whether federal benefits will apply to same-sex couples who marry in a state where same-sex marriage is legal but move to a state where it's not recognized.

To learn more check out this special report detailing Post DOMA Tax Implications

We may be based in New York State, however Freed Maxick CPAs provides tax services to business all over the U.S., no matter your location: Alabama, AL; Alaska, AK; Arizona, AZ; Arkansas, AR; California, CA; Colorado, CO; Connecticut, CT; Delaware, DE; Florida, FL; Georgia, GA; Hawaii, HI; Idaho, ID; Illinois; IL; Indiana, IN; Iowa, IA; Kansas, KS; Kentucky, KY; Louisiana, LA; Maine, ME; Maryland, MD; Massachusetts, MA; Michigan, MI; Minnesota, MN; Mississippi, MS; Missouri, MO; Montana, MT; Nebraska, NE; Nevada, NV; New Hampshire, NH; New Jersey, NJ; New Mexico, NM; New York; NY, North Carolina, NC; North Dakota, ND; Ohio, OH; Oklahoma, OK; Oregon, OR; Pennsylvania, PA; Rhode Island, RI; South Carolina, SC; South Dakota, SD; Tennessee, TN; Texas, TX; Utah, UT; Vermont, VT; Virginia, VA; Washington, WA; West Virginia, WV; Wisconsin, WI; Wyoming, WY. We Serve all 50 States.

Contact us to learn more about our tax services

 

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How Cyber Threats are Targeting Online Businesses

Online business is the new "Main Street" of America. According to the U.S. Chamber of Commerce, 74% of small businesses have a website online; many of these solely conduct business through their website. With an uptick of devices that increases social media presence (i.e. the smart phone, tablets, apps); businesses are able to conduct more of their daily activities online than ever before. This drive to do business or maintain a website online does not just apply to corporations, but to entrepreneurs looking to start or grow their business online.

While companies large and small are increasing their online business, larger companies have the capability to improve their defenses and resilience against cyber threats, leaving the small companies ripe for the picking for cyber criminals. Theft of digital information has become the most commonly reported fraud. Whether a business is utilizing, or thinking of utilizing cloud computing or just using email and maintaining a website, cyber-security should be part of the plan. It is a business’s responsibility for creating a culture of security that will enhance business and consumer confidence.

In order for businesses to stay a step ahead of cyber criminals these steps should be taken to increase security:

  • Train your employees in security principles- establishing basic practices and policies for online use, such as creating strong passwords, appropriate internet use, and rules on how to handle and protect customer information and vital data.

  • Protect computers, networks from cyber attacks- “cleaning” computers is one of the most vital things you can do to help prevent cyber attacks. For example having security software, web browser, and operating systems are the best defense against malware, viruses or other online threats.

  • Provide a firewall for your computer- a firewall is a set of related programs that prevents outsiders from accessing data on private network information. This includes ensuring that if an employee is working from home that their home system has firewall protection. One of the most common mistakes is downloading firewall programs but not “enabling” them; essentially “turning them on”.

  • Secure Wi-Fi networks- make sure that any Wi-Fi networks you have for your business is secure, encrypted and hidden. You can hide information by setting up your wireless access point or router so that it doesn’t broadcast a network name, and password protect access to the router.

  • Limit employee access to data- do not provide any one employee to all data systems. Employees should only be given access to the specific data systems that they need to perform their jobs, and should not be able to install any software without permission.

describe the imagePCI Compliance is also a big part of being secure online. PCI DSS is the Security Standards Council that was put into place to ensure that businesses storing, transmitting, and processing payment card data, are not putting their customers or their business at risk of data theft or fraud. The PCI DSS has four levels of compliance, with number one set as the highest level. The level that your business requires depends on:

  1. The volume of transactions you process, and
  2. How you process them.

Cyber-security is a team sport. Taking actions that will better protect both vital data and your business operations will have positive consequences for the security of all businesses, communities and the country. Computers and networks are interconnected through cyberspace; that means that both public and private sectors share responsibility.

Freed Maxick CPAs
Freed Maxick’s tax team and enterprise risk management team want to make sure that your online business is secure. Our firm is registered with the Payment Card Industry Security Standards Council, LLP (PCI SSC) and has Qualified Security Assessor’s certified by the Council to validate an entity’s adherence to the PCI DSS.  Contact us and connect with our experts.

More Insights and Guidance on Cybersecurity Issues - Click here.

 

 

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JOBS Act Amended- Its Impact on Crowdfunding

By Joe Burwick, CPA

lightbulb.jpgCrowdfunding is not a new concept, as grassroots fundraising dates back to 1997. But with new platforms, like that of IndieGoGo and Kickstarter, crowdfunding has gained traction in raising revenues for donations, charities, and businesses.

What types are there?

Crowdfunding relies on the concept of asking large groups of organizations and individuals, to contribute to a project. There are three primary types of crowdfunding:

  • Donation or Reward. When people give money towards a project and receive a gift or promise of one of the finished products in return.

  • Debt. Receiving funding from people with the expectation they will be paid back with interest in the future.

  • Equity. This involves getting a large number of people to buy into an idea in return for equity in the project or business.

Implications

Depending on the structure of the transaction (Equity, Debt, or Donation/Reward) there are differing tax implications and reporting requirements.  For instance, donations/rewards where the investor receives something in return is a taxable event and must be included in gross receipts.  However, if deductible business expenses exceed your crowdfunding revenue and other operating revenue, then you won’t owe income tax (but may owe franchise or minimum taxes). 

Depending on how the payments are received, the crowdfunding recipient may get Form 1099-K.  If payments are made by credit card or if payment in settlement of third party network transactions (i.e. PayPal) where gross payments exceed $20,000 and there are more than 200 transactions, you may receive one of these forms.  The IRS will look to match (and analyze) the income on your return to Form 1099-K you receive.

Legal Implications

In response to the growing popularity of Crowdfunding, the JOBS act set the Crowdfunding exemption for equity interest offered to the public at a ceiling of $1,000,000 for the aggregate amount sold to all investors in a twelve month period.  Prior to this act you had to either register with the SEC or meet another exception before offering securities to the public. 

The act further limits the amount sold to any individual investor based upon their annual income or net worth as follows:

  • If annual income or net worth is less than $100,000; the aggregate amount sold to such investor cannot exceed $2,000 or 5 percent of net worth / annual income.

  • If annual income or net worth is greater than $100,000 the aggregate amount sold to such investor cannot exceed ten percent of the annual income or net worth of the investor (not to exceed a maximum aggregate amount of $100,000).

You should consult a tax advisor to determine if the amounts received can be excluded from income (i.e. under Internal Revenue Code Section 118 for a Corporation). 

What are the Financial Reporting Requirements?

Not only are there potential tax implications to these equity investments, but you must meet various financial reporting requirements as well.  Here is what you have to know to meet the financial condition requirements clause of the JOBS act:

Different offering amounts have different SEC financial reporting standards. Congress has set forth the standards as follows:

  • If the target offering is $100,000 or less, the most recently completed income tax return and financial statements certified by the principal executive officer of the issuer must be provided.

  • If the target offering is more than $100,000, but not more than $500,000, financial statements reviewed by a public accountant independent of the issuer must be provided.

  • If the target offering is $500,000 or more, audited financial statements reviewed by a public accountant independent of the issuer must be provided.

describe the imageAs new provisions of the JOBS Act are rolled out, it seems to have raised more questions than answers for entrepreneurs and online start ups. While the bill was designed to help companies tap investors for the early cash they need to get established and hire workers, easing federal requirements for completing private share offerings; a young company would then be bound by SEC rules protecting the rights of their new stockholders, as well as certain state laws.

Don’t expect state security regulators to ease up anytime soon. As crowdfunding gains traction (and the dollars associated with it grow), so too will the scrutinizing of start-ups that issue shares through crowdfunding. Due to the complexities of parts of the JOBS Act and SEC rules toward crowdfunding, entrepreneurs should talk to a tax consultant; to be aware of all the state and federal regulations and the impact it may have at tax time.

Freed Maxick CPAs

Freed Maxick tax auditors will keep you up to date on the most pressing tax issues. If you would like to know how crowdfunding may affect your business at tax time Contact us and connect with our experts.

 

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Bitcoin | The New Cyber Currency?


Ever hear the saying “there’s an app for that”; well now there’s a currency for online users-Bitcoin. With no actual existence in the physical world, Bitcoin has been breaking barriers for online and consumer bartering.

How does it work?

By visiting an online exchange site, you can simply exchange traditional curriences (dollars, pounds, etc) for the virtual currency. Trading started at $7.00 in 2010, in exchange for one Bitcoin. What separates the Bitcoins from other tradable scripts (i.e. the Disney dollar), is that the coins trade on a floating exchange rather than having a fixed exchange rate set to a national currency. Prices have fluctuated wildly over the last couple of years, and with no government oversight or regulation, there is also no way to protect the online exchange. This led to a brief shutdown after Bitcoin sites were hacked. It is back in circulation, but finding places that will take the coin is difficult. There are some restaurants, book stores and online retailers that will take the coin as currency. It requires logging into your IPhone and sending the coins to the retailer you are dealing with, virtually. Once the exchange is complete, you have your merchandise.  According to Bitcoin Magazine, the currency has gained over 1 million users.

It can’t be that easy?

It’s not! When Bitcoin first started trading in 2009 it sold for less than a dollar. The virtual currency started garnering more attention when, in the start of January of this year, it rose from $10.00 to roughly $260.00 by April 10th. But that bubble burst when it fell to $77.00; since then it is slowly rising again. Not only is the currency volatile, but investors have had to deal with highly unstable trading platforms- the unfortunate symptom of decentralized currency. Currently there are 11 million Bitcoins in circulation, but this new way of bartering is unpredictable. Traditional currencies are safely held in a range of investment funds and banks. While both have their security problems, only one is considered “hard currency”.

Are there tax implications?

Due to widespread curiosity and the growing interest in Bitcoins, the Treasury Department issued a series of guidelines for Bitcoin brokers. The guidelines serve more as a direction against money laundering than tax implications. The IRS hasn’t specified yet whether Bitcoins should be considered an in-kind payment, bartering system, or foreign currency payment. Trying to decipher between these distinctions is no easy task, as each has its own implications under the U.S. tax code.  As the continued education is necessary, to be aware of future tax issues that may arise from internet currencies; as the IRS and government entities move toward concrete answers to questions surrounding the treatment of digital currencies.

High Tech WhitepaperFreed Maxick tax auditors stay current and update with currency guidelines, to help keep you aware of issues or implications that could affect your taxes. If you would like to learn more Contact us to connect with our experts.

We have also worked with hundreds of high tech companies and startups. Please call us to talk with one of our CPAs or business advisors about getting your high tech company to growth mode.  Call us at 716.847.2651, or contact us here.

 

 

 

 

 

 

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Options for Your High Tech Company’s Stock Compensation Plan

Navigating the Bewildering Maze of Options, Laws and Requirements

high technologyOne of the key ways that high tech companies recruit and retain loyal employees is through the use of stock based compensation plans. In addition to giving staff the opportunity to participate and share in the company’s growth, stock compensation plans serve as a way to align their interest with those of shareholders and investors. And, it’s a way to save cash.

However, there’s a bewildering maze of options, laws and requirements. These considerations include:

  • Securities law considerations (such as registration issues)
  • Tax considerations (tax treatment and deductibility)
  • Accounting considerations (expense charges, dilution, etc.)
  • Corporate law considerations (fiduciary duty, conflict-of-interest)
  • Investor relations (dilution, excessive compensation, option re-pricing).

The first step in creating a stock based compensation plan is to consult with your team of accountants and attorneys. They’ll help you understand what options are available, and the pros and cons of each. For starters, here’s a brief overview of the major type of stock based compensation plans:

Stock Options

 

Stock options give employees the right to buy a number of shares at a price fixed at grant for a defined number of years into the future. They are generally subject to satisfaction of vesting conditions (i.e. continued employment) or achievement of performance goals. There are two types of stock options:

Incentive stock options:  These are a creation of the tax code that can only be granted to employees. If and when certain requirements are met, the holder of the option can receive a favorable tax treatment when the option is exercised.

Nonqualified stock options: Non-qualified options do not provide special tax treatment to the recipient, but the corporation will get a deduction equal to the employee’s income upon exercise.

Restricted Stock

 

Restricted stock gives employees the right to buy a number of shares at a price fixed at grant for a defined number of years into the future. However, acquired shares aren’t fully owned by the employee until specified conditions occur like vesting if the employee continues to work for the company for a certain number of years.

Unrestricted stock

 

An employer corporation can give shares outright to the employee, subject to no restrictions.  The employee can pay full fair market value for the shares, pay a discounted amount, or pay nothing at all, but will get an immediate equity stake in the company. 

Phantom Stock and Stock Appreciation Rights (SARs)

 

These are bonus plans that grant the right to receive an award based on the value of the company's stock, hence the terms "appreciation rights" and "phantom."

If the employer corporation wishes to reward an employee based upon the performance of the company’s stock value but without giving up any actual ownership of the company, then stock appreciation rights (SARs) or phantom stock may be used. Phantom stock provides a cash or stock bonus based on the value of a stated number of shares, to be paid out at the end of a specified period of time.

Employee Stock Purchase Plans (ESPPs)

 

Employee stock purchase plans (ESPPs) provide employees the right to purchase company shares, usually at a discount. These plans allow employees to set aside money over a period of time (called an offering period), usually out of taxable payroll deductions, to purchase stock at the end of the offering period. Plans can be qualified under Section 423 of the Internal Revenue Code or non-qualified.

Freed Maxick has worked with hundreds of high tech companies and startups. Please call us to talk with one of our CPAs or business advisors on selecting the stock based compensation plan for your high tech company.  Call us at 716.847.2651, or contact us here.

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Choosing the Right Type of Legal Entity for Your High Tech Company

Your Decision Today Can be of Great Value – or a Hindrance - Tomorrow

entity selectionA critical decision for your high tech company that must come at a very early stage of life is the selection of the most beneficial legal entity. This requires a bit of crystal ball gazing, but the decisions you make early in the company’s history can be invaluable in helping the company achieve its goals, or a significant obstacle to growth down the road.

When choosing a business entity, owners need to consider issues like flexibility to raise capital for future growth, tax consequences – both on the company and its individual owners, and limitation of liability on owners, which is the starting point for making a decision.

The question is, do you as an owner want to incorporate so as to avoid being held responsible for debts of the business, or do you not incorporate and find yourself personally liable for the debts and obligations of the business?

Key Questions to Discuss With Your Trusted Advisors

Your trusted advisors will be asking you a number of questions in order to help you make the right decision on business entity type. We recommend that you come prepared with some insight about these questions to facilitate the discussion:

  • How will the business be funded now and in the future?
  • How many owners are there and would you ever bring on co-owners in the future?
  • Do you plan on having employees?
  • How much control over the business are you willing to give up?
  • Are you going to issue stock or membership interests?
  • What type of investors/owners are you willing to accept (trusts, foreign individuals, etc.)?
  • What will your exit plan be when you retire or leave your business?
  • Where will you do business?

A Guide to Types of Entities

This guide provides should only serve as a preliminary reference tool for helping you in your decision process.

Type of Entity

Discussion

Tax and Liability Consequences

UNINCORPORATED ENTITIES

Two types of unincorporated entities:

Sole Proprietorship - is owned by one individual who retains complete managerial control over the business

Partnerships exist when two or more people operate a business, and may be either general partnerships or limited partnerships.

Owners are personally responsible  for the  debt of the business

Profits and losses are reported on the owner's personal federal and state tax returns

In a general partnership, the partners are jointly liable for the debts of the business and share managerial control

Limited partnerships are comprised of both general and limited partners, but only general partners maintain managerial control and are personally liable for the debts of the business end.

INCORPORATED ENTITIES

 

Incorporated entities have rights, privileges, and liabilities distinct from those of its members, and  the obligations of an incorporated business remain those of the business

C Corporations  can issue multiple classes of stock and are may be an appropriate choice for businesses anticipating the need to raise a significant amount of capital

S Corporation may only issue only one class of stock and must have under one-hundred shareholders. An S Corp provides liability protection to owners, but is treated differently from a C corp regarding taxation.

C Corporations are double taxed, first when the corporation, as an entity, is taxed on its profits, and second, when the corporation makes distributions to its shareholders, who must also pay tax on the money they receive.

An S Corporation is not a separate taxable entity for federal, and most state, income tax purposes. Profits and losses are divided pro rata among the shareholders and "passed through" to their personal returns.

LIMITED LIABILITY COMPANY

An LLC is a hybrid entity that combines the best aspects of a partnership with those of an incorporated business.

Note that if venture capital is required for growth or operational funding, many LLCs are formed with the understanding that to ease the way, it will convert to an S or C Corporation.

LLCs protects the owners from personal liability while allowing business profits and losses to be "passed through" to their personal returns.

                                           

Can You Switch Entities?

high technologyIt is possible to switch types of entities, but this must be done with great care and consideration, and for valid reasons. Again, we urge you to consult with your team of trusted advisors on the merits of making a switch, and the liability, taxation and funding consequences of making a switch. Converting an LLC into a C Corp is a relatively easy transition (with proper legal and accounting guidance) as there may be minimal tax consequence and with the proper assistance, the economic rights of the owners and employees of the LLC may be readily transferred to the corporate format. This transition will make the company more attractive to venture funding sources.

Switching from an incorporated status to an LLC is more difficult and problematic from a tax perspective, and should only be considered for good reasons and with the counsel of your trusted advisors.

FreedMaxick has worked with hundreds of high tech companies and startups. Please call us to talk with one of our CPAs or business advisors on selecting the right entity type for your high tech company.  Call us at 716.847.2651, or contact us here.

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6 Reasons to Prepare an Annual Budget for Your Early Stage High Tech Company

Budgets are a Tool for Evaluating and Communicating Performance

annual budgetThere may be no better – or more important a time – to do formal annual budgeting than when your high tech company is looking to make the leap from early stage to growth company.  

Budgets are like an action plan for your high tech firm that allow you to plan and control expenses and match them to sales revenue. While they cannot always stay static, budgets create guidelines and prescribe limits. Last but not least, budgets are a tool for evaluating the performance of a company at the end of the time period that the budget covers – on both the expense and revenue side.

Of particular importance for the early to growth stage company, budgets show how money from funding sources has and will be used to make the leap.

What Should the Budgeting Process Accomplish?

high technologyIn our work with early stage companies, we look to the budgeting process to accomplish the following:

  • Sharpening the understanding of the company’s goals
  • Delivering a “real picture” that  shows what the company is actually able to do in a given year  and where the gaps in funding are
  • Encouraging critical and creative thinking on  effective ways of dealing with financing, revenue generation and expenditure  issues
  • Fulfill the need for required information requested by funding sources , vendors and employees and other stakeholders
  • Facilitate an open and honest dialogue about the financial realities of the company
  • Avoiding surprises and maintaining fiscal control

Freed Maxick has worked with hundreds of high tech companies and startups. Please call us to talk with one of our CPAs or business advisors on creating an annual budget for your high tech company.  Call us at 716.847.2651, or contact us here.

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A 10 Point Business Plan Checklist for Your High Tech Company

Making the Leap from Early Stage to Growth Requires Planning and Documentation

business planningHigh tech companies that are looking to make the leap from start up to growth stage must have a business plan. Business plans are not only important for raising funding, they’re a way to describe and promote your business, critical for getting shareholders and employees on the same page, and represent a reality check against both market and competitive situations.

There is an abundance of information about how to write a business plan and our CPAs and consultants have helped hundreds of companies though the strategic and business planning process. Based upon our experiences, we offer the following checklist that can help you assess your business plan efforts:

A 10 Point Checklist for Your Business Plan.

high technology companiesDoes your plan have:

                A short, concise, and clear executive summary

                A business rationale based upon your vision of the unsolved problems or needs that the business will address – i.e. – a convincing business case or “reason for being.”

                A concise description of your differentiating product or service 

                A clearly defined target market

                A competitive analysis and a SWOT analysis

                A statement of goals and objectives for the business over time

                 A comprehensive marketing plan, including both traditional and digital marketing strategies

                Bios of key team members, with particular attention to their responsibilities and key skills and capabilities they bring to the business

                A roadmap or implementation plan for reaching goals or objectives

                A credible financial plan, including projections

What Else Do You Need?

In addition to a full written business plan, we recommend that you also have available:

  1. An elevator pitch that delivers your value proposition in 2-3 sentences;
  2. A handout/executive summary of 1-2 pages that clearly outlines key aspects of your business;
  3. A PowerPoint presentation of 8-20 sides.

Writing a business plan is a fundamental and necessary step for making the leap – your current and potential investors will require one. But its value goes far beyond financial projections – it’s a roadmap to the future. 

Freed Maxick has worked with hundreds of high tech companies and startups. Please call us to talk with one of our business advisors on structuring a business plan that will help you with strategic, financing and operational strategies and tactics.  Call us at 716.847.2651, or contact us here.

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Financing Your High Tech Company’s Growth

Tap Your Trusted Advisor for Help in Building a Finance Acquisition Plan

financing high technology companiesIf there’s one common denominator for all high tech companies, it’s that they are always on the search for money to fund their growth. The transition from start up to growth is particularly tough because of the need for the company to balance growth with the need to build infrastructure, but in many cases, that just isn’t possible without financing assistance.

Having a well-conceived and structured business plan is fundamental to securing financing, but it has been our experience that successful firms find, and fight tooth and nail for every available dollar, without sacrificing too much in the way of equity or loss of control.

It’s a good idea to work with your trusted advisors to develop a financing plan that weaves’ several sources of financing together, along with a way to retain as much equity and control over the business as possible. Here are a number of ideas for sources of financing that you might consider:

  • high technologyAdvance payments from customers
  • Angel equity
  • Bank loans
  • Crowdfunding
  • Debt: factoring, asset based lending, mortgages
  • Federal or state government grants, loans or credit guarantees
  • Friends and family members
  • Funding out of cash flow
  • Local and state economic development organizations
  • Maximizing tax deductions
  • Small Business Innovation Research Grants
  • Smart leases
  • Refundable tax credits
  • Vendors
  • Venture capital

Of course, not all of these are going to be appropriate for helping to finance your company’s leap from start up to growth stage, but likely that some combination of these will be required.

Freed Maxick has worked with hundreds of high tech companies and startups. Please call us to talk with one of our business advisors on structuring a plan that will help you secure financing for your business. Call us at 716.847.2651, or contact us here.

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