In 2023, Jen Yahiku, controller at Modern Treasury, approached Neo.Tax about helping file the payment operations software company’s R&D credit. Since Modern Treasury already used Neo.Tax for Software Capitalization, she hoped to “utilize the efficiency”, saving time and money for the growing Series C company. “I wanted to streamline the process,” Yahiku says.
Neo.Tax went through the data of 165 employees, determined 101 of them worked on R&D (and how much time each spent performing R&D), and did it faster and more efficiently than Modern Treasury’s previous service provider. Here’s how:
The Problem:
In previous years, Modern Treasury would hand off their R&D credit to their tax preparer. In reality, that meant they’d have to start from scratch collecting data, and much of the work would come back onto Yahiku’s plate. “They'd ask me to break down the P&L by department, making sure that they have all the details of the individuals who worked in R&D and had access to their salary information,” she says. “Then, they would have to create their own set of workpapers in order to substantiate it.”
Suddenly, Yahiku found herself paying for a third-party service and still doing much of the work of sorting through and delivering relevant data. There’d be calls with a specialized R&D group, and she’d spend hours answering questions so that they could populate the filing on the tax return. “It was almost like I had another project to manage — all while making sure we had the tax return filed in time as well,” she says.
Modern Treasury’s finance team is “very lean,” so the wasted time was especially costly around tax season. “Anything I can save in terms of time and effort is greatly appreciated,” Yahiku says.
The Neo.Tax Solution:
Because Modern Treasury already used Neo.Tax for its software capitalization processes, creating an R&D tax filing was extremely simple for Yahiku. In less than an hour, she linked Modern Treasury’s project tracking data to the Neo.Tax platform and watched as the R&D data instantly populated the filing. “What's nice is that Neo.Tax streamlined everything in a platform where you could also review and figure out the output reasoning based upon actual hard data,” Yahiku says. “Then, my tax firm could just hit the ground running with the completed 6765 and supporting workpapers.”
What had taken dozens of hours and repeated calls with the tax preparers was now nearly effortless for Yahiku and her team. “My tax firm was actually impressed that you had a PDF of the actual tax form that was already prepared,” she says. “They were like, ‘Well, if you have this, you don't have to answer all our questions.’”
“What's nice is that Neo.Tax streamlined everything in a platform where you could also review and figure out the output reasoning based upon actual hard data. Then, my tax firm could just hit the ground running with the completed 6765 and supporting workpapers.”
The New Way for Modern Treasury:
Yahiku has seen how quickly the engineering team has bought into the Neo.Tax system. In that first year, she found she’d have to have a quick call with a team that wasn’t focused on Linear tracking; by 2024, “I didn't run into any sort of issues,” she says. “I don't even think I tapped engineering once.”
As any controller or tax manager knows, that’s a massive change: from both a time-saving and headache-relieving perspective. “It was very helpful, because usually if I do have to consult with engineering, then I have to find time on the calendar and hopefully it doesn't get canceled or moved,” she says. “Now, I can just verify it on my own, because we had the information that was already utilized from the platform on the capitalization side.”
Yahiku had signed up in 2023 unsure of how Neo.Tax would work for Modern Treasury. But she’s been pleasantly surprised by how much faster and more substantive their R&D filing has become. “Before 2023, we did it manually and it wasn't on a project-by-project basis. It was more like: ‘Who was on R&D projects?’ and then trying to figure out the numbers to put on the tax return,” she says. “With Neo.Tax, there's much more detail behind it. There's something to substantiate it off of.”
“It’s nice to have something to stand on,” she continues, “rather than just being like, ‘Well, I guess we gotta go ahead and pay for an R&D study soon.’”
