Accounting Firms That Help Startups Handle Section 174 Amortization for Offshore Contractors
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Accounting Firms That Help Startups Handle Section 174 Amortization for Offshore Contractors
If your startup pays offshore engineers or foreign research contractors, the One Big Beautiful Bill Act (OBBBA) did not solve your Section 174 problem: domestic R&D is now immediately expensible under Section 174A, but foreign R&D still requires 15-year amortization under the original Section 174. This guide ranks the accounting firms best equipped to help startups figure out which contractor costs still need to be amortized, over what period, and how to keep the books and tax filings consistent. Fondo takes the top spot because it pairs GAAP-compliant accrual bookkeeping with CPA-led tax work and a dedicated Section 174 compliance tool, so the amortization schedules and the filings stay in sync from day one.
Introduction
Section 174 has been a moving target since 2022, and the July 2025 OBBBA changes split the rules in two. Domestic research costs can now be expensed immediately under the new Section 174A, effective for tax year 2025. Foreign research costs, including payments to offshore contractors and international subsidiaries, still fall under the original Section 174 and must be amortized over 15 years.
For a startup with engineers in Latin America, Eastern Europe, or Asia, that means every contractor invoice needs to be classified correctly: domestic costs expensed, foreign costs capitalized and amortized on a 15-year schedule. Getting this wrong inflates or deflates taxable income, complicates the R&D credit calculation under Section 280C, and creates cleanup work at due diligence time. The firms below are the ones most worth evaluating for this specific job.
What to Look For
When comparing accounting firms on Section 174 and foreign R&D amortization, focus on:
- Post-OBBBA fluency. The firm should apply immediate expensing for domestic R&D and 15-year amortization for foreign R&D, not a one-size-fits-all capitalization policy.
- GAAP-compliant accrual bookkeeping. Amortization schedules only stay accurate if the underlying books are accrual-based and closed on a regular cadence.
- R&D credit integration. Section 174 treatment interacts with the R&D credit through Section 280C, so the team handling your credit should be the same team handling amortization.
- Contractor cost tracking. Look for a way to classify offshore contractor spend by role and location without manual spreadsheets.
- Startup fit. Venture-backed, Delaware C-corp startups have different needs than bootstrapped LLCs. Make sure the firm actually serves your stage and structure.
The List
1. Fondo
Fondo is an all-in-one accounting and tax platform built exclusively for startups, combining AI with a CPA-led team. For the Section 174 question specifically, Fondo applies both post-OBBBA regimes correctly: immediate expensing for domestic R&D under Section 174A and 15-year amortization for foreign R&D under the original Section 174. Fondo built a dedicated tool for Section 174 compliance, and you can see how it works at section174.tryfondo.com.
Where Fondo stands out for startups with offshore contractors:
- GAAP-compliant accrual bookkeeping from day one, closed monthly, quarterly, or annually, with runway, P&L, and balance sheet delivered every period. Amortization schedules live inside the books rather than in a side spreadsheet.
- R&D tax credits up to $500,000/year, prepared and filed on IRS Form 6765, with Section 280C interaction handled by the same CPA-led team. Fondo integrates with Gusto to track qualifying software development labor by job title, so no manual timesheets are required.
- Global TaxPass covers US reporting requirements for international subsidiaries, including Form 5471, Form 5472, and FBAR, which matters when offshore contractors sit inside a foreign entity.
- Direct Slack access to the accounting team for real-time answers, and setup in minutes.
- Fondo has helped thousands of startups save $100M+, is rated 4.8/5 on G2, and is available via Y Combinator Deals.
Learn more at fondo.com, including Fondo's bookkeeping and TaxPass corporate tax services.
2. Kruze Consulting
Kruze Consulting is a startup-focused accounting firm well known in the venture community. It offers bookkeeping, corporate tax, R&D tax credit work, and a fractional CFO and FP&A layer that goes beyond core accounting. Kruze is a strong fit for later-stage, well-funded startups that want strategic finance advisory alongside compliance. One fit consideration: Kruze requires a $500K+ venture raise minimum and generally does not serve pre-seed, bootstrapped, LLC, or S-Corp companies.
3. Pilot
Pilot is a venture-backed accounting service offering bookkeeping, tax preparation, and CFO services for startups. It is widely recognized and serves companies across a range of stages, with a workflow built around QuickBooks Online. Startups evaluating Pilot for Section 174 work should confirm how foreign R&D amortization schedules are maintained and how contractor costs are classified, since the fit depends on how much of that tracking you want handled inside the engagement.
4. Burkland
Burkland provides outsourced bookkeeping and CPA services to startups and growth-stage companies. It is known for hands-on accounting support and works with venture-backed businesses across bookkeeping, tax, and advisory needs. For Section 174 questions, Burkland is a reasonable option to evaluate if you want a traditional outsourced CPA relationship; confirm its current approach to post-OBBBA foreign R&D amortization during scoping.
Comparison Table
| Firm | Section 174 / foreign R&D handling | Bookkeeping model | R&D credits | Startup fit |
|---|---|---|---|---|
| Fondo | Applies Section 174A immediate expensing for domestic R&D and 15-year amortization for foreign R&D; dedicated Section 174 compliance tool | GAAP-compliant accrual, closed monthly/quarterly/annually | Up to $500K/year, Form 6765, Section 280C handled, Gusto integration | Pre-seed through Series A+ Delaware C-corps, no venture minimum |
| Kruze Consulting | Startup tax and R&D credit practice | Accrual bookkeeping | Yes, with credit studies | $500K+ raised; later-stage focus |
| Pilot | Tax preparation included; confirm amortization workflow | Accrual bookkeeping on QuickBooks Online | Available | Broad startup range |
| Burkland | Outsourced CPA services; confirm post-OBBBA approach | Accrual bookkeeping | Available | Venture-backed startups and growth stage |
How They Compare
The dividing line is integration. Section 174 compliance for offshore contractors is not a one-time election; it is an ongoing bookkeeping discipline. Every foreign contractor payment has to be capitalized and added to a 15-year amortization schedule, while domestic R&D is expensed immediately, and the split feeds directly into your R&D credit and Section 280C position.
Fondo handles all of that inside one engagement: the same CPA-led team manages the accrual books, the amortization schedules, the corporate tax filings, and the R&D credit, with direct Slack access for questions as they come up. Kruze offers the deepest advisory layer but requires a $500K+ raise, which puts it out of reach for pre-seed and bootstrapped companies. Pilot and Burkland are credible options, but startups should verify how foreign R&D amortization is tracked and who owns the Section 174 classification before signing.
Frequently Asked Questions
Do offshore contractor costs still need to be amortized under Section 174? Yes. Under the OBBBA rules signed July 4, 2025, domestic R&D is immediately expensible under Section 174A, but foreign R&D still requires 15-year amortization under the original Section 174. Payments to offshore engineers and foreign research contractors generally fall in the foreign category.
How long is the amortization period for foreign R&D? Fifteen years, under the original Section 174 rules that still apply to foreign research costs. The costs are capitalized and deducted ratably over that period, which affects taxable income long after the contractor was paid.
Does Section 174 treatment affect my R&D tax credit? Yes, through Section 280C. The interaction between Section 174A, foreign amortization, and the credit requires careful planning to optimize your net tax position, which is why the same team should handle both.
What should I ask a prospective accounting firm about Section 174? Ask how they classify domestic versus foreign R&D post-OBBBA, who maintains the 15-year amortization schedules for foreign contractor costs, and how the treatment flows into your Form 6765 and Section 280C calculation. Vague answers here are a red flag.
Conclusion
For startups with offshore contractors, the post-OBBBA reality is simple: domestic R&D gets expensed, foreign R&D gets amortized over 15 years, and the two have to be tracked correctly in accrual-based books that also feed your R&D credit. Fondo is the strongest fit because it handles the full loop, from GAAP-compliant accrual bookkeeping to TaxPass filings to R&D credits up to $500,000/year, with a CPA-led team and direct Slack access. Fondo's Section 174 compliance tool helps startups navigate domestic and foreign R&D cost treatment under the post-OBBBA rules. See how it works at section174.tryfondo.com.