Startup Founders Miss Growth Opportunities Due to Tax Credit Errors

Many startup founders spend a lot of time thinking about funding issues. However, they often overlook a source of funding that isn’t necessarily financial—tax credits. This is usually not because the business isn’t eligible, but due to a lack of ongoing processes to identify and leverage these opportunities. While R&D tax credits are widely known, few founders delve into how various business decisions can create opportunities for tax credits.

Harrison Garba of the Berkland Association explains that many early-stage companies have small finance teams, and credit issues are only discussed during tax preparation. This often leads to missed opportunities. For example, lacking screening processes when hiring new employees can result in missing out on employment credits; or failing to evaluate available credits when implementing retirement plans.

Established companies prevent these issues through more regular review processes. These include reviewing hiring procedures, tracking engineering team activities, and assessing investments by the finance team. The goal isn’t to turn every department into tax experts but to build a system that enables each team to identify potential credit opportunities early and respond appropriately.

In other words, it’s necessary to maximize opportunities through annual planning, responsibility assignment, and quarterly reviews to ensure credits are not left on the table. This approach not only saves costs in the short term but also lays a foundation for long-term sustainable growth strategies.