CPA for SaaS, software, gaming and online advertising companies
Books, tax returns and tax credits for digital businesses, from founders' first year to a funded team. Southlake CPA serving tech companies across Texas.
Which digital businesses do you work with?
Three kinds of company whose product lives online and whose biggest costs are people and platforms. Their books look alike; their tax questions do not.
Software and SaaS
Subscription software, apps and custom development shops, bootstrapped or venture-backed.
- Deferred revenue and MRR
- R&D credit and payroll offset
- Sales tax on subscriptions
Game studios
Independent studios and publishers selling on Steam, consoles and app stores, or running live-service games.
- Platform payout reconciliation
- Development cost treatment
- Sales tax on games and virtual items
Online advertising and ad tech
Digital marketing agencies, media buyers, influencer networks and ad-tech platforms.
- Media spend, gross or net
- Creator and contractor 1099s
- Profit by client and campaign
Which tax rules matter most for software and digital companies?
Seven rules account for most of the tax money a digital company saves or loses. Each one turns on how the books are kept during the year, not on what happens in April.
Software development costs are deductible again
Applies to: Software, SaaS and game studios
Under Section 174A, development work done in the U.S. is deductible in the year it is paid, for tax years beginning after 2024. Work done outside the U.S., including offshore contractors, is still spread over 15 years. Domestic costs still unamortized from 2022 to 2024 can be deducted in 2025 or split across 2025 and 2026.
The R&D credit can offset payroll tax
Applies to: Startups with payroll and under $5 million in revenue
A qualified small business (gross receipts under $5 million and none more than five years back) can apply up to $500,000 a year of research credit against the employer share of payroll tax, using Form 6765 and Form 8974. A company with no income tax yet still gets cash value from the credit.
Texas taxes SaaS as a data processing service
Applies to: SaaS and ad-tech platforms
Texas treats hosted software access as a taxable data processing service, with 80% of the charge taxable after a 20% exemption. Other states range from fully taxable to exempt, so every new state where you pass the economic threshold needs a check. See our sales tax nexus analysis.
Games and virtual items are taxable in Texas
Applies to: Game studios
The Texas Comptroller treats electronic games, game subscriptions and virtual currency as taxable amusement services. Free-to-play games are excluded, but paid items inside them are not. App stores often collect the tax as the marketplace; sales from your own website are yours to collect.
Revenue is earned when it is delivered
Applies to: All three
An annual subscription paid in January is earned month by month, so most of it sits on the balance sheet as deferred revenue. An agency that passes media spend through to clients has to decide whether it reports that spend as revenue or only its fee. Investors and lenders read both numbers.
Founder equity: 83(b) and QSBS
Applies to: C-Corp founders and early employees
An 83(b) election on restricted stock must reach the IRS within 30 days of the grant. For C-Corp stock issued after July 4, 2025, Section 1202 can exclude 50% of the gain after three years, 75% after four and 100% after five, up to $15 million or 10 times basis, if the company's gross assets stayed at or under $75 million.
Paying people and platforms abroad
Applies to: Teams with overseas developers or foreign owners
Overseas contractors sign a W-8BEN or W-8BEN-E instead of a W-9, and their development cost falls under the 15-year rule above. A company owned from abroad also files Form 5472 each year; see our tax service for foreign-owned companies.
What does a monthly close look like for a SaaS company?
The same close every month, finished early enough that your metrics and your books agree before the board deck or the investor update goes out.
| What we do | What you get |
|---|---|
| Reconcile Stripe, app store and ad platform payouts to the bank, fees and refunds included | Revenue that matches cash, by product and platform |
| Roll forward the deferred revenue schedule | Recognized revenue you can defend to an investor or auditor |
| Tie MRR, ARR and churn to the general ledger | One set of numbers for the dashboard and the books |
| Tag payroll and contractor time to development projects | The records the Section 174A deduction and the R&D credit need |
| Track sales by state against economic nexus thresholds | Warning before a new state registration is due |
| Report burn and runway | Months of cash left, updated every close |
Payroll runs through our payroll services; entity setup through company formation. The monthly books follow the same process as our accounting services. Multi-state exposure is covered in sales tax registration and filing and nexus analysis; R&D and deduction planning sits with our federal tax preparation.
Questions software and digital founders ask
Should my software startup be an LLC or a C-Corp?
If you plan to raise venture money or offer stock options, investors usually expect a C-Corp, and only C-Corp stock can qualify for the QSBS exclusion. A bootstrapped company that pays out its profit often does better as an LLC taxed as an S-Corp. We compare both for your plans before you form or convert.
Can a pre-revenue startup use the R&D credit?
Yes. A qualified small business with gross receipts under $5 million can apply up to $500,000 a year of the credit against the employer share of payroll tax, so the credit turns into cash even before the company owes income tax. It needs payroll and records of the development work.
Do I charge Texas sales tax on my SaaS subscription?
Usually yes for Texas customers. Texas taxes SaaS as a data processing service on 80% of the price. Other states differ, so we check each state where your sales pass the economic nexus threshold and register only where you must.
How are Steam or App Store payouts recorded?
We record the full sale price as revenue and the platform's share as a cost, then reconcile each payout report to the bank deposit, including refunds, chargebacks and currency conversion. That gives you gross revenue and platform fees as separate lines.
Is media spend revenue for a digital agency?
It depends on who controls the ad buy. If the agency commits to the spend and bears the risk, it usually reports the gross amount; if it buys as the client's agent, it reports only its fee. The choice changes your revenue, your margins and your Texas franchise tax.
We pay developers overseas. What do we file?
Collect a W-8BEN or W-8BEN-E from each contractor instead of a W-9; no 1099 is filed for foreign contractors who work outside the U.S. Their development cost is deducted over 15 years under Section 174A, not in the year paid.
Do you work with tech companies outside DFW?
Yes. Most software clients work with us by video, shared folders and their accounting software, from anywhere in Texas and other states. Our office is in Southlake for anyone who would rather meet in person.
Talk to a CPA who knows software companies
Bring your cap table, your Stripe export or your last return. The first consultation is free.
Book a free consultation- Hours (US Central)
- Monday to Friday, 9 am to 6 pm