Tax Help After Series A

Before Series A, many founders pay themselves through owner draws or minimal W-2 salary. After the raise, investors and counsel usually want real payroll — which means you're on a proper pay schedule with federal withholding, state unemployment, and workers' comp in every state where you have employees.

You'll also likely refresh your 409A valuation. The strike price on new option grants has to reflect fair market value. If your last 409A was from a $3M seed round and you just closed at $40M pre, those numbers aren't interchangeable.

Board-approved equity grants need paperwork: grant date, vesting schedule, exercise price, and an ISO/NSO split if you're offering both. Miss the 83(b) window on early exercised options and there's no do-over.

Register for state withholding in every state where you have W-2 employees. California, New York, and Texas all have different registration portals and deposit schedules. Remote hires make this harder — someone's home address is usually their work location for tax purposes.

Confirm your payroll provider (Gusto, Rippling, Deel, etc.) is set up for multi-state. Run a test payroll before your first real cycle. I've seen founders discover their provider wasn't remitting California SDI until an employee flagged a missing line on their pay stub.

File Form 941 quarterly once you have employees. Most startups also need state unemployment (SUTA) filings. Keep copies of every state registration confirmation — you'll need EIN-adjacent numbers during year-end.

New hires will get options at the post-409A strike price. That higher price isn't a tax event for them yet, but it does mean less upside per share compared to early employees. Some companies do refresher grants; that's a comp decision, but each grant needs its own tax treatment analysis.

If you're granting ISOs, watch the $100K annual exercisability limit per employee. Amounts above that convert to NSOs automatically. Founders who self-exercise early should file Form 83(b) within 30 days of exercise — postmarked, not emailed.

RSUs become more common after Series A, especially for senior hires. RSUs are taxed at vest as ordinary income. Withholding at 22% federal often isn't enough for employees in California or New York. Flag this in offer letters so people aren't surprised in April.

If you're building software, you may qualify for the federal R&D credit under IRC Section 41. Form 6765 is the filing form, but the real work is documentation: who worked on what, for how long, and which activities meet the four-part test.

Don't wait until tax season. Set up a simple time-tracking tag for qualifying engineering work now. Payroll tax offset (for companies under $5M in gross receipts with no tax liability) can reduce your quarterly 941 deposits — real cash back in year one if you file on time.

Some states (California, Texas, Arizona) have their own R&D credits with separate forms and deadlines. A Delaware C corp with California employees often files in both places.

Delaware franchise tax is due March 1 for C corps. The default calculation method can produce a shockingly high bill. File using the Assumed Par Value Capital Method if you have a typical VC cap table — it usually saves money.

California Form 100 if you're a DE corp with CA nexus (employees, office, or significant sales). Even unprofitable companies generally file. Newly SOS-qualified corporations are usually exempt from the $800 minimum franchise tax in their first taxable year; starting in year two, you typically owe at least $800 whether or not you're profitable.

C corps don't issue K-1s — keep proper corporate books and, if you pay dividends, handle 1099-DIV reporting. Investors doing diligence will ask for clean financials. QuickBooks or Pilot is fine — just reconcile monthly, not in December.

If you've hired in more than two states, granted options to 10+ people, or spent real money on engineering, you probably need a CPA who does this weekly, not once a year. Look for someone who knows Form 6765, 409A coordination, and multi-state nexus — not just a general small-business preparer.

A good time to engage is 60–90 days post-close, before Q2 payroll and option grants pile up. They'll set your estimated tax payments, review your R&D documentation process, and tell you whether an accountable plan for reimbursements makes sense.

This article covers common patterns, not your specific situation. If you're post-Series A and haven't talked to a tax advisor yet, that's the first checkbox.