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First-time founders, here’s what you don’t know about taxes (but should). You’ve got the energy. You’ve got the ideas. But when it comes to taxes, it’s a whole new ballgame. I’ve seen this time and again. Founders get caught up in building their products, raising capital, and scaling their businesses. But taxes? They’re often an afterthought. The truth is… Ignoring taxes can cost you big time. Most founders don’t realize the impact tax decisions can have on their company. They don’t know the deadlines, the compliance requirements, or the potential pitfalls. And that’s okay—because you’re not expected to know everything. So, what can you do? Here’s what I tell every first-time founder: ↳ Choose the right entity type. Whether you’re an LLC, S-Corp, or C-Corp, your choice affects everything from fundraising to taxes. Choose wisely. ↳ Compliance Isn’t Optional. Missing a tax deadline isn’t just a minor slip-up. It can lead to penalties that eat into your cash flow. ↳ Partner with experts. A good tax advisor isn’t just a service provider. They’re a strategic partner in your success. Remember... An informed founder is a successful founder So don’t let the unknowns hold you back. Get the guidance you need to build your startup on a solid foundation. _____ Found this helpful? Follow me (Chris Mossa) for more insights on building strong business foundations.

Most founders wait until the last minute to involve their board in the budget process. Big mistake. When you present a budget, you’re telling a story: → How you plan to grow → What resources you’ll need → What outcomes you expect And if you’re telling this story for the first time in a board meeting, you’re too late. The best founders get board feedback before the final presentation. They engage board members early (often in one one meetings), sharing the vision behind the numbers. And collecting feedback which can be valuable…..or not (but at least everyone is heard). This leads to a stronger, more aligned budget.

Are hidden costs lurking in your OPEX, eating away at your SaaS margins? Let’s unpack how top SaaS companies manage this with a 15-minute exercise that could redefine your profits and pricing strategy. Many SaaS companies struggle with what truly belongs in their Cost of Goods Sold (COGS)—and it’s not their fault. Misunderstandings around COGS can quietly erode your margins. Let’s take a look at some of the most successful publicly traded SaaS companies for clarity: DocuSign, Zoom, Dropbox. By digging into their 10-Q’s and 10-K’s, we find some fascinating trends. The hidden costs of running a SaaS business don’t just come from hosting. Here’s what they include in COGS—and you should, too. 1. Hosting and Data Costs: Obviously, your cloud bill is COGS, right? Yes… but what about your test environments for R&D? Those are actually operating expenses (OPEX), not COGS. Get this wrong, and you’ll have a distorted view of profitability. 2. Customer Support: Here’s something almost every early-stage startup misses: customer support costs should go in COGS. Without this, you’re seriously underestimating the cost of delivering your service. Even if you don’t have a dedicated team yet, you’re still supporting customers—and that has a cost. 3. Credit Card Processing Fees: A small but sneaky one. Stripe or PayPal fees? Those belong in COGS too. If you’re not including them, you’re missing a recurring expense that directly impacts your bottom line. 4. Amortization of Capitalized Software: Here’s where things get trickier. Did you spend a chunk of money developing software that has a useful life? That cost needs to be amortized over time and reflected in your COGS. Ignore this, and you’ll falsely inflate your margins, giving you a misleading view of profitability. 5. Outside Services & Licensed Tech: Are you using any third-party services or licensed tech in your product (like an API or AI model)? Even if your customers never see it, the costs for those tools should land in COGS. If not, you’re missing a crucial part of your cost structure. 6. Allocated Overhead: This one is more complex, but every part of your business—whether it’s servers or customer support—requires time and resources to manage. Larger companies often allocate these costs to COGS, and as you grow, you might need to do the same to get a clearer picture of profitability. Why does this matter? If you’re skipping over some of these costs or not allocating them correctly, you’re flying blind when it comes to understanding your true margins. This could lead to bad pricing decisions, scaling inefficiencies, or even a false sense of security about your profitability. Spend 15 minutes mapping all your costs, even hidden ones, for crucial insights into how you scale and make financial decisions. It’s time to get a crystal-clear understanding of what’s really driving your costs. Do you really know what’s in your COGS?

3 reasons why so many startups are forming Delaware C-Corps… (It’s not just for the tax benefits) 1. Investors Love Them If you’re raising money, investors want to see a Delaware C-Corp. It’s their go-to choice. Because the investor protections are considered the best. 2. Legal Protection Delaware’s legal system is startup-friendly. The courts are fast, experienced, and predictable. It’s a safe bet that can help you avoid legal headaches down the road. 3. Flexibility Delaware gives you options. Want to offer stock options to attract top talent? Easy. Need to restructure? No problem. As your company grows, Delaware gives you room to expand, restructure, and adapt. So, when investors push for Delaware, it’s not just a preference—it’s a smart move for everyone involved.

“LIFETIME Value you ask? Well, given advances in technology and modern medicine… I will assume our average customer will be with us for 120 years!” As a former VC and now founder + advisor to many startups via Graphite, I often see confusion on how to go about looking at CAC and LTV when things are often quickly changing. I am a visual person, so I strongly prefer looking at graphs such as below versus pure numerical metrics. It leaves zero room for interpretation or confusion, and tells you the answer you are looking for. First, you need to calculate your customer acquisition cost, or CAC. The easiest way to do this is simply the total amount of sales and marketing spend in each period (TOTAL, meaning people too!) - divided by the number of customers gained in a period. Second, you need to calculate your cumulative margin derived from each cohort of customers. Basically, how much money you made from an average customer over time. This is explicitly NOT cumulative revenue of a given cohort of customers (unless you have the best business on earth with 100% margins, your product or service will have costs associated with earning that revenue.) Probably a lot of costs. Scenario 1… is perfectly fine (the red line is CAC, where they cross is your payback period… 4-7 months on average! Scenario 2… Throw in a modest 50% difference in CAC… This scenario is a slow and miserable death.

Your startup could be facing a hidden tax trap. Here’s how to avoid it... Imagine this: Your startup has a million-dollar loss. You’ve invested heavily in R&D, expecting a big tax break. But then Rule 174 hits. Suddenly, that loss turns into taxable income. Now you owe taxes...without the cash to pay them. Here’s what’s happening: Under the new Rule 174, companies must capitalize R&D expenses and amortize them over five years. That means all these expenses don’t count on your P&L. The result? Fewer expenses turning a net loss into Phantom income on your books. Taxes on profits that don’t really exist. For many startups, this means going from a loss to a tax bill overnight. What can you do? → Start by understanding the impact. → Work with your tax advisors early—before year-end. → Plan for the cash crunch that might come with this rule. By planning ahead, you can manage Rule 174 without crippling your cash flow. _____ Found this helpful? Follow me (Chris Mossa) for more insights on building strong business foundations.

"Didn’t we hard code these in the investor V72-draft-final-draft model?" 💀 This is the moment when your financial model “Frankensteins”. Sound familiar? Trust me, it happens more often than you think. Here’s the deal: As you scale, the pressure to perfect every financial detail can lead to version after version of “precision optimization.” But when you have 40 different scenarios, with endless tweaks, you’re no longer modeling reality… You’re building Frankenstein’s monster. Let’s break it down… The Modeler’s Dilemma: → Too simple: Hitting plan or not hitting plan is closer to luck than executing to a playbook. You’re flying blind with no way to measure against reality. → Too complex: The model turns into an indecipherable mess of formulas, assumptions that cannot be measured in real life, and scenarios. (Good luck explaining that to your board.) The key is to keep it simple, but not too simple. A great financial model is one you can actually use—one that aligns with real-world data you can track and measure. How do you avoid “Frankensteining” your model? 👀 1. Only model what you can measure in real life. If you can’t track your assumptions, how do you expect to confirm them? Spoiler: You can’t. 2. Budget vs. Actuals every month. Seriously, do this. You’ll spot discrepancies fast, and you’ll be able to adjust before things get ugly. (Hint: Ugly = Frankensteining.) 3. Quarterly deep dive. You can’t wait until year-end to compare your model to reality. Frankenstein models are scary, but running a business with no pulse check? Even scarier. Remember: The devil’s in the details, but don’t let the devil turn your model into an impossible mess.

Tax season isn’t just a once-a-year event. For startups, it’s a year-round commitment. If you wait until the end of the year to think about taxes, you’re already too late. Surprises pop up. Missed credits. Unplanned expenses. Suddenly, you’re scrambling to catch up—and it’s costing you. Instead, you should think about year-round tax planning. Here’s why: 1️⃣ No Surprises Taxes can sneak up on you. A year-end meeting helps you avoid nasty surprises at filing time. 2️⃣ Maximize Savings You might be leaving money on the table. By planning ahead, you can maximize deductions and minimize what you owe (think R&D tax credit). It’s about making your money work harder for you. 3️⃣ Plan for Growth Got big plans for next year? Expanding? Hiring? Domestic or Overseas? Did you know the R&D tax credit only includes qualified U.S. based expenses Your tax strategy should support those goals. Year-end planning aligns your tax approach with your business strategy. 4️⃣ Peace of Mind Starting the new year with your tax plan in place means less stress and more focus on growing your business. It’s one less thing to worry about.

What is a startup's “assets” worth after it dies? Often, very very little. A shutdown scenario is part of the nature of the startup industry. So… then why so SERIOUS of a post? Well, that very same startup was potentially worth 10x more just 6 months earlier - with a team and operations to support it. The saddest scenarios tend to be: 1. Product/market fit 2. Revenue growing modestly 3. Solid unit economics 4. Huge, bloated cost base Those are companies that clearly have value. Maybe tens of millions of dollars of value. In an alternate dimension where the company saw the cash flow cliff ahead, and cut now vs later, it could have had a more solid landing. I have yet to see a scenario where selling a startup’s assets (with no team/systems/processes to run it) has resulted in anything other than a huge disappointment. Once the lifeblood of the business is gone, its just a codebase that can (maybe?) be used for other purposes. Startups fail… but if your startup is heading down that road, focus in what's ahead and look for that Plan B offramp. They’re out there.

Why do some physical products take off while others flop? It often comes down to one thing: Simplicity. The most successful companies start with one product. They nail the design, perfect the pitch, perfect the customer experience, perfect the packaging, and ensure it resonates with the market. Then, and only then, do they think about expanding. But too often, I see brands launching with 10 or 20 SKUs right out of the gate. Here’s what happens: - Learnings from the first product cannot be applied to future ones. - Inventory piles up. - Products don’t move. - The market gets confused. And suddenly, the company is stuck with a bunch of items that nobody wants. Instead, focus on doing one thing well. Get it right. Build momentum. Then, you can start thinking about what comes next. The companies that do this are the ones that thrive. Keep it simple. Make it work. Then scale.