Bay Area entrepreneurs have a never-ending amount of excitement in their lives.  The roller coaster of emotions continues from developing a solid business plan to launching a new product. Business startups and taxes in San Francisco

A startup leader might experience a heart-jarring ride from confidence one day to despair the next.  This experience can last for several years before a business is fully established. (If you’re looking for an accountant for startups, give us a call today).

According to (, the first four years are the most crucial, but true success may be up to eight years away.  What are some of the usual ups and downs while starting a startup? 

Here are a few examples:

The Up: Venture Capitalists are interested and investing in you.  That’s uplifting!  They believe your business has the potential to make it through the first few years. 

The Down: You can’t let them down.  It’s time to work on delivering what you promised and watch how you spend your money.  That can be stressful. 

The Up: Marketing staff is creating a “buzz” about the business.  Your product is the new hot ticket in the Bay Area.  Curious customers are showing up and buying!

The Down: Marketing is expensive!  Poor planning can lead to laying off some of the best sales folks who keep that positive business buzz.  And when customers aren’t reminded how great you are, they tend to disappear, too. 

The Up: Everything is new – office furniture, workspace, tools, staff and equipment.

The Down: Everything is expensive – office furniture, workspace, tools, staff and equipment.

Those with an entrepreneurial spirit are ready to face these typical ups and downs with a sense of adventure.  They understand this is part of the startup lifestyle.  But it doesn’t have to be more challenging than it already is.  The foundation for any startup is a solid financial plan and someone to lead the way. 

A startup owner may be smart enough to realize they don’t have enough time to manage the full-time work of both a Chief Financial Officer and a Chief Executive Officer.  But what is the best and most intelligent way to go?

Startups and Taxes: Is an In-House CFO required?

Every penny counts in the first four years of a new business, and a great CFO is pricey.  Adding a bookkeeper to the payroll doesn’t seem robust enough.  An entrepreneur needs a partner to help manage heavy financial responsibilities during a new business’s unpredictable ups and downs.  This includes handling payroll, daily expenses, income, bills, and purchases.  It also includes creating a long-term financial plan to keep the business humming during challenging times.  And tax planning is one of the main ingredients to the long-term health of any startup in the Bay Area!

Each stage of a startup requires leveraging every financial benefit. And California provides incentives and support.  Our state is known to encourage new business growth and cutting-edge technologies.  Startup culture thrives here, and when a new business does well, so does the state tax base.  Yet even with this positive news, the downside is the reality of success.  The failure rate for a startup is currently at 90% ( 

The main reasons for failure are:

  1. Lack of a long-term, solid business plan 
  2. Cash flow issues
  3. Legal problems

Many entrepreneurs might be great at product development and marketing but need strong accounting and tax skills.  When every purchase and expense is essential, working with a professional CPA to manage CFO duties part-time can provide a fair balance to the bottom line.