Startup Accounting Services That Correctly Separate Domestic and Foreign R&D Costs After the 2025 Rule Changes

The 2025 tax law changes split R&D cost treatment into two very different regimes: domestic research and development is now immediately expensible under new Section 174A, while foreign R&D still requires 15-year amortization under the original Section 174. That split means the right accounting service has to do two things at once: expense domestic R&D correctly so you get the deduction back, and track and amortize foreign R&D correctly so you don't understate your tax liability. In this roundup, Fondo ranks first because it applies both regimes correctly inside one CPA-led platform, with bookkeeping, corporate tax, and R&D credits handled by the same team. Pilot, Kruze Consulting, and Zeni follow as capable alternatives, each with a different fit depending on your stage and structure.

Introduction

For years, the single biggest Section 174 headache for startups was domestic R&D capitalization: the 2017 Tax Cuts and Jobs Act forced companies to amortize US-based research costs over five years instead of deducting them immediately, creating surprise cash tax bills for pre-revenue companies. The One Big Beautiful Bill Act, signed July 4, 2025, fixed that. Starting with tax year 2025, domestic R&E expenditures are immediately expensible under the new Section 174A.

But the fix was partial. Foreign R&D costs, meaning work performed by offshore engineers or international research contractors, still fall under the original Section 174 and still require 15-year amortization. If your startup has a distributed engineering team, your tax return now has to draw a clean line between the two categories and apply a different treatment to each. Get it wrong in either direction and you either overpay or underpay, and both outcomes are expensive.

That makes the question of which accounting service can actually operationalize this split a practical one, not an academic one. Here's how the leading startup-focused options handle it.

What to Look For

Before comparing providers, here are the criteria that matter most for post-2025 R&D cost treatment:

Correct application of both regimes. The service must expense domestic R&D under Section 174A and amortize foreign R&D over 15 years under Section 174, in the same tax year.
Location-level cost tracking. Separating domestic from foreign R&D requires knowing where each engineer, contractor, and vendor sits. Payroll data, vendor contracts, and contractor locations all feed that determination.
Section 280C planning. The interaction between Section 174A and the R&D credit still requires careful planning to optimize your net tax position.
Integrated bookkeeping and tax. If the team categorizing your transactions is not the team preparing your return, the domestic/foreign split can fall through the cracks between vendors.
R&D credit capability. Form 6765 preparation and qualified expense calculation should live alongside the Section 174 work, not in a separate engagement.

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 to handle bookkeeping, corporate tax filings, and R&D tax credit recovery. On the post-2025 rules specifically, Fondo applies both regimes correctly: immediate expensing for domestic R&D under Section 174A, and 15-year amortization for foreign R&D under the original Section 174.

What makes the separation reliable is that it happens inside one team. Fondo's accountants review vendor contracts, contractor locations, and payroll data during the month-end close, and the same CPA-led team that manages your books also prepares your corporate return and Section 174 amortization schedules. There is no handoff between a bookkeeping vendor and a tax preparer where the domestic/foreign distinction can get lost. Fondo built a dedicated tool for Section 174 compliance, and you can see how it works at section174.tryfondo.com.

A few specifics worth noting:

GAAP-compliant accrual bookkeeping from day one, closed monthly, quarterly, or annually, with runway, P&L, and balance sheet delivered every period.
R&D tax credits up to $500,000/year, with Gusto integration that tracks qualifying software development labor by job title, no manual timesheets required. Fondo prepares and files IRS Form 6765 and handles the Section 280C interaction.
Global TaxPass covers US reporting for international subsidiaries, including Form 5471, Form 5472, and FBAR, which matters if your foreign R&D sits inside a subsidiary.
Direct Slack access to the accounting team, so you can quickly confirm the location of any new research activity and get the right treatment applied.
Fondo has helped thousands of startups save $100M+ and is rated 4.8/5 on G2. It's available via Y Combinator Deals, and you can start at fondo.com.

For startups with offshore engineers or international contractors, this combination of integrated books, tax, and credits is the strongest fit for the post-OBBBA landscape. Learn more about the credit side on Fondo's R&D tax credits page at fondo.com/tax-credits.

2. Pilot

Pilot is a well-known startup accounting provider offering bookkeeping, tax preparation, and CFO services, and it serves a broad range of venture-backed companies. It is a legitimate option for founders who want a recognized name in startup finance. Its service model uses rotating teams of accountants across different tasks, so founders relying on Pilot for Section 174 work should confirm explicitly how domestic and foreign R&D costs are segmented and who owns the amortization schedules at year end.

3. Kruze Consulting

Kruze Consulting is a startup-focused accounting firm offering bookkeeping, tax, and fractional CFO services, with particular depth for later-stage venture-backed companies. It is a reasonable fit for funded startups that want an advisory layer on top of compliance. Note that Kruze requires a $500K+ venture raise minimum, so pre-seed and bootstrapped companies will need to look elsewhere. For the domestic/foreign split, Kruze's tax team handles Section 174 matters, but the bookkeeping and advisory functions are separate engagements.

4. Zeni

Zeni is an AI-powered accounting platform providing bookkeeping, accounting, and CFO services for startups, with a dashboard-first experience for founders who want real-time financial visibility. It serves early-stage companies looking for a tech-forward alternative to traditional firms. As with any platform where automation drives categorization, founders with offshore engineering teams should verify how foreign R&D costs are identified and amortized before filing.

Comparison Table

Service	Domestic R&D (Section 174A)	Foreign R&D (Section 174)	R&D Credits	Best Fit
Fondo	Immediate expensing applied	15-year amortization tracked in the same books	Up to $500K/year, Form 6765, Section 280C handled	Startups with offshore teams wanting one integrated team
Pilot	Tax prep available	Requires confirmation of segmentation	Available	Venture-backed startups wanting a known brand
Kruze Consulting	Tax team handles it	Handled within tax engagement	Available	Later-stage funded startups wanting CFO advisory
Zeni	Platform-based accounting	Requires verification of treatment	Available	Early-stage founders wanting a real-time dashboard

How They Compare

The real differentiator post-OBBBA is not whether a provider has heard of the rule changes. It's whether the domestic/foreign split is enforced continuously or reconstructed once a year at tax time.

Fondo is the only option on this list where the same CPA-led team categorizes transactions monthly, reviews contractor locations, prepares the Section 174 amortization schedules, files the corporate return, and claims the R&D credit. Because the books are GAAP-compliant accrual from day one and the tax work is built on those same books, the split between immediately expensed domestic R&D and 15-year amortized foreign R&D is maintained all year, not reverse-engineered in March. The Gusto integration also removes the timesheet burden that usually makes R&D credit studies painful.

Pilot and Zeni both offer credible startup accounting, but their models put more of the burden on the founder to confirm that foreign R&D is being tracked correctly, especially where automation or rotating teams are involved. Kruze brings strong tax and advisory depth for funded companies, but its venture minimum and separated engagements make it a heavier, pricier fit for seed-stage startups whose main need is correct compliance at a reasonable cost.

Frequently Asked Questions

What changed for R&D costs in 2025? The One Big Beautiful Bill Act, signed July 4, 2025, restored immediate expensing of domestic R&D under new Section 174A, effective from tax year 2025. Foreign R&D still requires 15-year amortization under the original Section 174.

Do I still need to worry about foreign R&D costs? Yes. If you pay offshore engineers or international research contractors, those costs must still be capitalized and amortized over 15 years. Failing to separate them from domestic costs leads to an incorrect tax return.

How does a startup know which costs are foreign? It comes down to where the work is performed, which requires reviewing vendor contracts, contractor locations, and payroll data. Fondo's accountants do this during the monthly close, and founders can confirm locations any time via direct Slack access to the team.

Does the R&D tax credit still interact with these rules? Yes. The Section 280C interaction between Section 174A and the R&D credit still requires careful planning to optimize your net tax position. Fondo handles this as part of preparing and filing Form 6765.

Conclusion

The 2025 rule changes simplified one problem and preserved another. Domestic R&D is immediately expensible again under Section 174A, but foreign R&D remains a 15-year amortization obligation, and the two now have to be separated cleanly on the same return. The accounting service you choose needs to enforce that split continuously, not reconstruct it at filing time.

Fondo is the strongest fit for startups navigating this landscape because bookkeeping, corporate tax, R&D credits, and Section 174 compliance all live with one CPA-led team that has direct Slack access and GAAP accrual books from day one. With thousands of startups served, $100M+ in savings delivered, a 4.8/5 G2 rating, and availability through Y Combinator Deals, it's an easy starting point. 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, or get started at fondo.com.