Tax Credits for Startups and Small Businesses

Hosted By Matt Watson

Full Scale

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Doug Ludlow

Today's Guest: Doug Ludlow

CEO and Co-founder - MainStreet

San Jose, CA

Ep. #979 - Tax Credits for Startups & Small Businesses

In today’s episode of Startup Hustle, Matt Watson talks with MainStreet CEO, Doug Ludlow, about how businesses can save money using tax credits. They discuss the various types of tax credits and incentives available on the federal and state level. Doug also provides insights on why MainStreet is viable now when it wasn’t ten years ago.

Covered In This Episode

Most small business owners and startup founders are unaware they are leaving money on the table from unclaimed tax credits. MainStreet provides a platform where they can find and claim federal and state tax credits and incentives.

Get the details as Matt Watson dives into this unique business model with MainStreet CEO Doug Ludlow. Find out what tax credits and incentives entrepreneurs should be thinking about and which states are aggressively wooing tech-based startups.

Get Started with Full Scale

You might also be interested to find out that it’s never too late to claim tax credits. Learn more by jumping into this episode on the Startup Hustle podcast!

Best Entrepreneur Podcast Available on Spotify, Apple and Google Podcasts


  • What does MainStreet do? (1:36)
  • What was the very first idea for MainStreet? (5:21)
  • What types of tax credits should I be thinking about? (9:57)
  • What states are aggressively trying to build technology businesses and industries? (13:45)
  • What would it be worth to incentivize a startup with 100 people to move to Portland? (16:01)
  • How MainStreet will shake out the post-disaster world and its impact on remote work (19:48)
  • Why now is the time for Main Street (24:11)
  • Is it too late to take advantage of this? Is it retroactive? (28:52)
  • What is the most important thing you can do right now? (34:05)

Key Quotes

I’m a big believer that the idea you have when you start, odds are it will not be the idea that scales. And you have to be really flexible in those early days to figure out what you are.

– Doug Ludlow

I think that the one part of this, that a lot of us will miss from working remotely, is not having those same personal relationships with coworkers.

– Matt Watson

It does feel like magic. But really, it’s because technology is smart now, and we’re able to leverage that.

– Doug Ludlow

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No man is an island, and we are very grateful to all of our Startup Hustle partners for their support. Together, we provide the startup community with expert insights into different industries to help them on their way to success.

Rough Transcript

Following is an auto-generated text transcript of this episode. Apologies for any errors!

Matt Watson 00:00
And we’re back with another episode of the Startup Hustle. This is your host today, Matt Watson, very excited to be joined today by Doug Ludlow from Main Street. He’s going to tell us all about how to save money on our taxes. And as a, you know, startup or small company, we’re always looking for tax credits and how to save money. And I’ve taken advantage of some of those in the future. So, I’m hoping he gives us some secrets today about how we can save more money on our taxes.

Matt Watson 00:27
I do want to remind everybody that today’s episode of Startup Hustle is sponsored by Equip-Bids Auctions, your Midwest online auction marketplace to buy and sell stuff. Equip-Bid provides dedicated support to affiliates in Kansas, Missouri, Nebraska, and Iowa. Join the team and sell everything from heavy machinery to home goods, vehicles, and boats to tractors and furniture. Go to Equip dash for details, or just click the link in the show notes. Doug, welcome to the show, man.

Doug Ludlow 00:56
Hey, super happy to be here. Thanks for having me.

Matt Watson 00:59
So you are the CEO of MainStreet. I guess, first of all, tell us a little bit about what does MainStreet do.

Doug Ludlow 01:06
So MainStreet is pretty simple. We act almost as a bridge between startups and small businesses. And the government, especially specifically, government tax credits and incentives. Every year, like literally hundreds of billions of dollars are earmarked for incentives that, you know, people want to go to small businesses and startups right help stimulate the American economy instead of small business growth that everyone, regardless of political parties, you’re excited about and interested in providing. And yet, because it can be difficult to discover these credits difficult to claim, something like 97% of this goes unclaimed by startups and small businesses. And it’s usually just the big guys, the Amazons, the Boeing’s that take advantage of this. So Mainstreet makes it super easy to discover and collect these tax credits and incentives.

Matt Watson 01:56
But you guys are not like an accounting firm or don’t do any of that kind of stuff. You just only deal specialized with the tax credit.

Doug Ludlow 02:03
That’s exactly right. We’re not an account, uh, not an accounting firm. We work with companies, and their accountants were even thinking of us like, we’re a software tool, right? We use the data; it actually was really cool. You connect your HR system, you connect your payroll, you connect your accounting, and we use the signals embedded there to use that to intelligently match you with credits, right? Do all the legwork. It’s the type of thing where most accountants do not do this work because they’re not trained. Your average small business or startup accountant actually doesn’t know how to file the R&D credit doesn’t know, you know, there’s a long list of credits that most counties don’t do. So we have the, really the platform that takes care of all takes care of that for you, and you’re down.

Matt Watson 02:53
So how did you guys get started doing this? So like one was Main Street with Main Street was started three years ago sounds like you’ve grown guys and grown very rapidly. And where you were one of the founders?

Doug Ludlow 03:04
I am, so founder and CEO. And really, we spent the first year we started three, almost exactly three years ago, October 2, 2019. And the first six months were spent really trying out a lot of different ideas. The mission has always been from the day from day one, to help create jobs and opportunity for those who don’t have it, right? But we tried a lot of different concepts. And one of the big ones was, hey, can we get people to move out of big cities and bring their startups or bring their small businesses to rural and suburban areas? How do you, you know, this was before COVID. Before that became a very popular thing to do. Yeah, we’re kind of hipsters on that front. But, you know, during that process, we learned all about this giant, invisible network of local incentives, you know, $10,000, to move to Tulsa, Oklahoma, you know, $10,000 to move to Vermont, are these different, you know, 10% back for doing your R&D in a state. And we recognize that there’s this huge multi 100 billion dollar network that exists of government credits and incentives, that you’re just gonna miss out because you don’t exist. And that was a big opportunity. We did not start out trying to do tax credits. But very clearly, that became what the resonated with customers with the market. And yeah, we’ve grown. We launched this version of the product, about two and a half years ago, maybe in July is July 22, 2020. And growth has been very strong. It’s been a little bit nuts.

Matt Watson 04:36
So the tax credit portion of it they’ve been doing for the last two and half years, it was actually kind of a pivot. That wasn’t the original idea.

Doug Ludlow 04:42
That was a pivot, but I think we, we often say that we will remain true to our mission the whole time. You know, helping create jobs and opportunity, but I don’t know whether the this is this probably was the fourth or fifth idea we tried in those first six months. I’m a big believer that you know, the idea you have When you start, odds are it will not be the idea that scales. And you have to be really flexible in those early days to figure out what are, you know, what are? What is the market actually saying? What are customers actually saying? We’re not dealing with something that requires deep, deep, deep research before it’s viable, right? This is not a drug, right? This is not a deep piece of technology. So really, it’s a market risk, and you have to pivot and move fast until you get there.

Matt Watson 05:27
So what was the very first idea, the very first idea was just to do with creating jobs.

Doug Ludlow 05:31
You’re gonna laugh at the very first idea. It was to create a suburban and rural version of WeWork. Actually, like co working. So, the idea is, you know, wouldn’t be great in rural cities to have a place where your startup founders can go, have all the same access to, you know, creative talent, jobs, you know, recruiting, etc, that you get in the cities. And we got excited about doing this. I grew up in a city called Modesto, which is kind of the middle of California Central Valley, pretty much agricultural. And they actually could use something like this a remote workup. So we kick that off. And, of course, it was at the same time that we were trying to go public, totally tanked. And killed for a couple years of co working industry, a lot of their complaints about the business. Yeah. And so we very quickly, I was like, We are not going to be doing this business. No one’s gonna want to fund this. But we kept that spirit of like, how do we create jobs and went through a couple different things.

Matt Watson 06:31
Well, I think this is great. I think it’s great for the listeners, because a lot of times what you know what we start from our business idea, you know, along the way there we learn, and we adapt, and pivot and change. And so like my last company, my goal had to do with helping software developers monitor and do troubleshooting for applications that they were supporting. And the original way that I thought I would solve that problem. And then eight years, eight years go by and the way that we were, you know, we eventually did it was a little different. Right? So and, you know, a lot of startup journeys are that way. And so I think that’s why it’s great to really highlight that. So I think what I want to know is how so how did you how did you come to this point at MainStreet, like what did you do before Main Street that kind of led you to here?

Doug Ludlow 07:13
Sure. So I, I thought, kind of always been an entrepreneur, if that makes sense. I don’t love the word entrepreneur. But it started with I was a kid, I ran a lawn mowing business back in the day sold candy door to door that I made. In college, I started a i a textbook import business, we didn’t import them from overseas. So I’m here for a significant discount. I, I did go to college for history and political science, I thought I was gonna be a lawyer, I got a job in politics after the college thing, I was going to law school. Really, really glad I didn’t nothing against lawyers, but it just wouldn’t have been for me. I actually got into gun to the technology startup bug, really soon after college. I started with a obviously you call a side project, a company with a friend that absolutely went nowhere. But from then on, so it really the last Gosh, 16 years, been going back and forth between, you know, starting a company and then going to a big company, right? Starting a company or working for someone else’s startup. I, I’ve had some successes, I’ve had some failures along the way. And it’s really given me the, I think the opportunity now at Main Street to have seen it, what is it like day one at a company, right? What are the things you have to do? I’ve also seen, you know, Google, and actually Google’s ads team, I was, I was at Google right before I came here as the Chief of Staff for Google Small Business ad units, like this $20 billion ad unit. So I got to see what a company looks like when it’s functioning really well at scale. I also was one of my companies was acquired by AOL years ago, it was the AOL that was in the middle of like, declining across the board. So it’s interesting to watch, what does it feel like at a company where things aren’t going well, and where those signs so all that you put that all in a blender? Thing served me really well for what I’m doing on Main Street. Now? How do you how do you stay scrappy, it’s built for scale. How do you track when, you know things are going right, etc. So it’s been a long road. But everything I learned along the way is, is serving me now.

Matt Watson 09:24
So if I’m an entrepreneur, and I’m listening to this right now, what should I be thinking about in regards to the type types of tax credits? So for example, I think r&d tax credit is probably one of the most common ones and one of my companies was able to take advantage of that. But I’d love you know, love to hear more from you about the various types of tax credits that are common that people should definitely know about.

Doug Ludlow 09:49
Sure. Well, there are two whole different categories of tax credits. One are credits that the company can access for itself and others that employees can benefit from, but through their connection to the company. And so I, so yeah, on the company side, the R&D tax credit is huge, right, and it’s still under utilized. It’s something that was started in 1981, primarily as a way to help American aerospace companies during the Cold War, maintain an advantage, right, an edge and it’s grown at a loss for years is expanded to cover software companies and really become more and more accessible to small businesses and startups, that could change in 2016. To where companies can get r&d tax credit applied to the payroll tax, which means you save even if you’re not profitable. So the r&d, it’s if you’re a if you’re a startup, if you’re a small business that does anything technological or anything new, I, it’s a great credit to use. And there’s actually 56 different state credits available in 38 Different states, they actually mimic the r&d, the federal r&d program.

Matt Watson 11:02
So that sounds like a nightmare to keep track of.

Doug Ludlow 11:06
Well, that’s what we do as a business. One way to think about Main Street is we’re kind of like plaid, but for tax credits, right? Plaid, you know, it’s really hard to integrate with all these banks, they do it for you. We’re actually very similar in that, you know, we’re trying to bring order to this kind of crazy chaotic, but incredibly valuable system. So yeah, start, start with r&d, it’s, it will likely be one of your largest credits, especially in your early days.

Matt Watson 11:33
What else is there any other great kind of business use, you said, there were employees specific in the business specific or other good examples of the business.

Doug Ludlow 11:42
We’ll start with business-specific, right? If you’re like most businesses, you’re going to invest some money every year, and actually making sure that your, your company is, you know, can be used by people with disabilities. So there’s a disabled access credit to where you’re actually able to get about 50% back of what you spent, you making sure your website’s more accessible, making sure your physical buildings more accessible. There’s something called the Work Opportunity Tax Credit. That’s a collection of actually nine different sub credits that come from hiring people from disadvantaged backgrounds, or people who struggle for example, if you’re a veteran or a wounded veteran, or if you’re someone who’s used public assistance, etc. There’s a significant amount of capital to to hire an employee, these people, so the list kind of goes on and on. On the tax credit side there, there still is a few remaining, excuse me, COVID tax credits, the employee retention credit, there’s a actually a credit you can get for giving your employees time off to get vaccinated or to recover from COVID. Those, of course, are going away as COVID, you know, kind of recedes. But if you look at Yeah, on the I start with, with with, with with r&d, try to make sure you’re checking for Watson Work Opportunity Tax Credit, those combined can save you literally hundreds of 1000s of dollars per year.

Matt Watson 13:05
Well, and so my my last company was based in the state of Kansas, and we were able to take advantage of something called the PEAK Program, which I think stood for, like promoting employment across Kansas. I think that’s what’s so for sure, but I think a lot of states have similar programs to like that. And it had to do with like, we, it was primarily based on where you were like leasing a new office space, and like how many jobs you’d be creating in that office or in that location. And, and you’d get some, like state matching funds are state credits on what you would normally pay, like employment tax on the state, the state contribution or whatever. And, but it was cool. We, I mean, we took advantage of that. And that was a big advantage for us. And there are a lot of states that do those kind of like just create creating jobs in the state are creating jobs in the city kind of stuff, too.

Doug Ludlow 13:57
There are literally 1000s of them, like literally 1000s And, you know, it’s our vision, we’ll eventually have them all on the platform someday. They’re all pretty one off at this point, though. So it’s it’s not like things you can standardize well, but no, there’s there’s been fantastic programs, especially in states that are trying to compete for for credit, right, California and New York, they already have plenty people coming they don’t really do much there. But for example, cities do the city of Sacramento has a whole program where if you come in, set up an office or a store in downtown Sacramento, you get $100,000 for doing that, employing a 10 people overthrew I know it’s kind of that’s more but hey, for them, it increases the tax base. It helps stimulate the economy. It’s a far better way to do so. No all across the board. In many states, actually Utah is one of the Utah and Oklahoma are two of the best states for promoting these type of programs. Graham’s again, you look at what are the what are the states that are aggressively trying to build, especially technology businesses, and technology industries, you look at like Utah, and you know what you see in Tulsa, Oklahoma, kind of models for the rest of the country who’s trying to compete. Really, I think more of these things should exist, not less. You know, for up to me, my hometown in Modesto. I live in the Bay Area. Now, what would it be worth to have incentivize a startup with 100 people? It’s to incentivize Google to start hiring engineers there, right? What that will do for your economy over the next 50 years, is pretty extraordinary.

Matt Watson 15:36
Well, so I’d live in Kansas City. And actually, this whole topic is actually been a big topic from a business perspective for a long time, because the state line goes right down Kansas City, there is there is the Missouri part of it, and the Kansas part of it, and most people, a lot of people actually work in a city called Overland Park, Kansas and that area, and there are a lot of jobs there. So we had headquarters of like sprint, which is now available, and there’s a lot of jobs there. But the problem is, is all these companies just fight this stupid war, this war and go back and forth over the state line, which is not the same as like, Oh, you’re in San Francisco, and you get some tax credits. If you move to Portland, like it’s a big damn deal to move to Portland, OR is on right, we’re here. It’s like literally like one mile. Like it means, you just rented an office, like just down the street, and all of a sudden, I get a bunch of tax credits. And, and so here, it’s actually been a big problem and a hindrance. And actually, I think the states kind of called it off eventually. So I think like two or three years ago, the States finally said, Look, we’re going to do these tax credits. But if you’re moving from Missouri to Kansas, you can’t get them. If you move from anywhere else, you can get them, they finally had to call off the war, because it was like an insane war that was going on where we live, or just jumping back and forth over the border.

Doug Ludlow 16:52
I’ve heard about that exact, that exact problem. And it’s kind of funny, but it also is a huge waste of everyone’s time and resources. Yeah. Because you’re not simulating anything.

Matt Watson 17:01
It wasn’t creating anything at that point. Because we’re, the people lived wherever they live, like our employees lived wherever they lived, didn’t even matter.

Doug Ludlow 17:10
You’re starting to see a shift to smarter incentives. I mean, probably one of the worst cases will last 10 years with Scott Walker, and I believe it’s Wisconsin with this Foxconn plant, and Wisconsin pledged, I believe something $100 million to this, maybe even more, and then of creating a few dozen jobs, right? Is one of those A, it’s kind of this last, you know, last waves of old school, hey, we’re going to get government, hundreds of millions of dollars up. A lot of those type of incentives get washed away, what’s the interest? And the interesting thing about modern technology, though, is now that you know, now that your HR systems are smart, right? They’re like cloud-based, you can actually track our incentives. actually hiring people is is actually working, you know, can you I can see every dollar spending incentives, eventually trickling through. And I know that resulted in X amount of jobs. So you’re able to far more target tax credits and incentives down the way you couldn’t before. And that’s thanks to this new smart the rise of smart business tools. It’s kind of cool. Hopefully the government will waste less money, and instead incentivize hyper-targeted ways that were simply impossible to do before.

Matt Watson 18:31
Well, as a reminder, today’s episode of Startup Hustle is brought to you by equip bids auctions, an online marketplace dedicated to growing small auction businesses. They’re solving problems and providing a fun re commerce or liquidation shopping experience devalued bidders go check out their incredible offerings, and sign up at equip dash Or look for the link in the show notes.

Matt Watson 18:57
So you also mentioned incentives to the employees. Yeah, and I’ve heard about some of those you mentioned Tulsa earlier. And I’m from Kansas City, Tulsa is not very far away. It’s a couple hours away. I’m actually from Oklahoma myself. And I mean, that makes a lot of sense. And I think you hear this especially for like things like doctors, right, like rural doctors and things where like, there’s some little city out in the middle of nowhere that has like no doctor and they’re like, Hey, we will pay your student loans just come live here.

Doug Ludlow 19:23
Right. So that’s a whole wave of incentives. Right. I told the Tulsa remote program is probably one of the best examples of that being the first or one of the first we’ll pay you $10,000 to take your remote job and move to Tulsa. It’s interesting to see how these things are going to shake out in post COVID world to our most many companies are now totally fine with taking a remote job used to be something that was a little exotic, not necessarily something that was stable. Now that most Come on many, many times, not most, but many companies are allowing you to be remote, I think you’re gonna see a massive rise in these types of programs, who if I can now start to compete for awesome employees who make a lot of money, the multiplying effect is huge. There are probably different 30 or 40 different states and cities that offer some variation on this program. I, my guess is that the numbers are going to go up and he’s generally was $10,000. You know, what’s it going to do to, for example, a track that high paying engineering lead or that to your point that doctor, that’s a whole wave of relocation incentives, that’s huge.

Matt Watson 20:38
Well, I think there’s definitely a wave of at least those who have the types of jobs that they can work remote, of moving out of these more congested areas. And actually, our company Full Scale in the Philippines a great example this most of our employees are in Cebu City and, and most of them would, you know, spend over an hour a day just commuting one way to the office. Sure, all of our employees were required to work in the office. And once COVID happened and all that we went remote, and honestly never thought we would do that we were kind of anti remote before it started. Sure. And now everybody works remote. And so everybody saves probably two hours a day and commute time ish. And a lot of our employees have since then moved like now they’re they went to the other side of the island or a different island or living with their family out kind of in the countryside, like literally on the beach. And they just work remotely for us writing code, right. And that’s awesome. Now, that sounds a little better than going to Tulsa, I take the beach over over Tulsa. But it just goes to show like I think we’re gonna continue to see a lot more of that with remote and I work remote the company I work for I work remote, and wherever I work for next, what would be remote, I have no interest in working in an office. I love working remote.

Doug Ludlow 21:51
Sure. And you’ll start to see that the smart cities, the smart states will start incentivizing that. Especially for people early in their careers. If you can grab someone when they’re wanting to start their first company, or if they’re right out of, you know, business school or or really whatever, like, how great would it be to help them set roots as remote employees somewhere that you might not traditionally allude to, for example, Bend, Oregon has been something like that the population has spiked over the last three years, because it swarmed by people want to live in a beautiful area, and have a real job like this that you’re seeing. That’s That’s why Miami had such a huge wave of Yes, move in there. Because again, Miami is a cool place to live. It’s not cheap, but it’s cool. And smart cities will take advantage of that.

Matt Watson 22:36
You know what you need to do, you need to start a company that does co working and the smaller cities.

Doug Ludlow 22:40
Hey, if only someone there’s, you know, fortunately, thankfully, we’re under some pretty good right now, I think now, that’ll be a huge opportunity for someone to start, they make a lot of money.

Matt Watson 22:57
At some point, I like working remote, but it would be nice, you know, once a week to meet up with some colleagues or whatever. And, you know, a lot of us spend most of our time with our co workers like those are some of the best friends we make like in real life. Right. So I think that is the one part of this that a lot of us will miss from from working remote is not having those same personal relationships with coworkers.

Doug Ludlow 23:19
I agree.

Matt Watson 23:20
So tell me a little more about your platform. So you so you’re saying if I use paychecks, I use QuickBooks, I you know, I use common accounting and payroll systems, you know, and there’s a lot of them. But so so your guyses system is able to just like plug into the data feeds of those and then somehow magically told me and all the employees how we could be getting these tax credits.

Doug Ludlow 23:41
That’s exactly right. Sounds like magic. So it’s it’s the type of thing you know, when we’re raising money, venture capitalists always ask the why now question, right? Like, why can Main Street Why Is now the time, right for Main Street. And you know, five to 10 years ago, we couldn’t have done this because your HR systems and your businesses were done, where they didn’t talk to each other. They were, you know, they’re not cloud-based. Here, though, the fact that like the last five years, pretty much any modern company is going to use a gusto or rippling or a QuickBooks payroll or zeros, you know, one of those platforms that actually starts to talk to each other, right. So what we’re able to do is our first breakthrough, you can go and pull all the data, start parsing it and do all the things that you know, an accountant will have to do manually. But we can save basically 100% of that time. It’s all done automated, right? So we’ve already cut out you’re already infinitely faster than an accountant on that side. And now that we’ve seen 1000s and 1000s of companies go through, we start to see like, we start making suggestions based on companies like yours, do certain things, and it gets more and more sophisticated. So it does feel like magic. But really, it’s just because technology is smart now and we’re able to leverage that.

Matt Watson 24:58
So do you have any good stuff, adds on how much the average small business can get in tax credits and government incentives?

Doug Ludlow 25:05
There’s a wide range, right? Because it depends on–

Matt Watson 25:10
A million dollars.

Doug Ludlow 25:11
Yeah, exactly. So our average company right now saves about $100,000 a year on the platform. But we are our main target market, our company is theirs, we call them like technical, technology-oriented, growth-oriented small businesses. So we don’t I mean, we can work with anyone, but we focus specifically on those people who are tech-savvy and looking to grow. So startups fall into that category, you know, small businesses who want to grow their business and leverage technology. And that works well, because, you know, we’re able to happen to r&d credits, we’re able to tap into hiring credits, there’s a lot of things we’re able to do there. So the average, if you’re a tech-oriented startup, yeah, you’re looking at hundreds of 1000s of dollars. If you’re a small business, though, this is something like a true Mom and Pop WOTC is your best bet the Work Opportunity Tax Credit, because that’s something to where, for example, I mentioned that that’s the program that helps employ people who may struggle to get jobs, about 50% of all people employed by restaurants qualify for this, right. So a restaurant, you know, you’re looking at $2,400 to $9,600 per employee, right? Restaurants can pay a huge amount, like if they’re tapping properly, can save an enormous amount of money, right, using the WOTC credit alone. So I guess my point is, it really depends on what type of company you’re doing. But almost any company, so long as you are either hiring or doing certain types of activities like growing and investing in r&d, everyone should be able to save literally 1000s of dollars per year, what you what you on the company side, you won’t really be able to save as you’re not hiring anyone if you’re not growing, if you’re very comfortable being just, you’re where you are, because the government wants to incentivize hiring and growth and development, right? That’s where the money is. On the flip side, though, what’s the thing that actually–I think I skipped skip this– employees can now take advantage of a ton of credits that are connected with their employers, for example, I, your employer can now pay tax free your student loans for you, right, so you know, up to $5,500 per year. So you’re saving, let’s say 30% of your income usually goes to taxes. So you’d be saving $1,600 per year, if you had your employer pay rather than you it’s, there’s things like that for childcare, there’s things like that for commuter tax benefits of the list goes on and on. And when you start to add in those, any employee across the country, small business or big business should be taking advantage those, we call them cooperative credits, because you can’t claim it as your on your own as an individual, your business can’t claim it by itself, it really is at that intersection of cooperation between the business and the employee. So that’s that, you know, it’s not going to save your business that much. The great thing is that your business no longer has to pay payroll tax on that. So you’re gonna save about 10% there. But it’s…

Matt Watson 28:13
So let me ask you this. So, my, the company I work at now we have like 50 or 60 employees or something like that, but we’ve hired probably 30 of those this year, is it too late to take advantage of some of this or some of this still retroactive that like, you know, we could still get some benefit from the people that we already hired.

Doug Ludlow 28:31
Oh, 100%, like 100%. So, it depends on which program right but anyone here For example? I will, in fact, we should talk afterwards and sign up for Mainstreet. See, like which of these employees are doing, you know, supporting or conducting, or supervising research and development, which has employees, you can, you know, see if they apply for fall from a get any, if they qualify for any tax credits, and then 100% of these employees, if they have student loans, you know, you can pay that if they have childcare, you can pay that there’s a lot of things you can do there.

Matt Watson 29:03
So I love the student loan one. So that’s not necessarily where’s the company, like I’m going to all my employees and saying, Oh, I’m giving everybody $5,000 a year for free, but it could also be something they just opt into as an employee to say, so the employee, it’s sort of like, hey, instead of getting direct deposit, I want to take 10% of my money and do this with it for someone so they can do something like that.

Doug Ludlow 29:24
it’s called a pre-tax benefit, right? It’s very similar to a 401k or like a Health Savings Plan, write things to where it gets deducted as your income pre-tax, right until you sign in the background is salary reduction agreement. It’s the same exact thing you do when you do an HSA or a 401k. But this world has exploded, and I’d actually argue is the fastest-growing type of tax incentive. Because it’s, you know, it lives that intersection of business and employee and because programs platform’s now smart, right, it comes a lot easier for the employer to implement something like this, you just flip a switch, and everyone starts to save money. It’s this really powerful.

Matt Watson 30:10
So if 10. So basically, if 10 of my employees did this, and that went to $50,000 a year in student loans, I would basically save as a company, you know, maybe 10 20%, or whatever it would be that the company would have paid in taxes on that money. So, and they certainly didn’t save me money, but also saves employee money.

Doug Ludlow 30:28
In the end, you’ll say, like, counted like your, your company’s benefit. And plus your employees benefit, the basically a 40% back on average at the end, because you’ll get 10% of the company, and they’ll get about 30%. It’s, it’s shocking. And that’s the reason like our business exists. No one takes advantage of this, or very few people do, right?

Matt Watson 30:49
I never heard of it till today. No, I’m learning. I’m learning new stuff today.

Doug Ludlow 30:53
And then there’s all sorts of things like we talked about remote work, there’s if you set up an accountable plan for your employees, certain expenses, can be paid for tax-free, like, you know, internet for home uses Home Office usage, there’s a long list of Be careful that you know that you’re categorizing everything correctly. But there’s a lot of incentives that just people don’t take advantage of.

Matt Watson 31:15
So how does Mainstreet make money? How do you guys make money from what you’re doing here.

Doug Ludlow 31:20
We don’t make money unless you do. So we have, you know, unlike accountants, or consultants, who they have to pay for their time, so they’re going to charge you upfront, guaranteed can cost you 1000s of dollars, just like this. What we do is it’s a 20% success fee for every dollar we find you that you weren’t gonna get. Otherwise, we get 20%. Along with that, we provide full audit, production, if anything goes wrong, we’ll be there to support you in cover 100% of errors we might make. We set you up with, you know, a ton of all that we basically handle all the ongoing work that you’d have to pay an accountant or consultant to do throughout the year. So it’s it’s a, it’s a win-win model, we only make money. If you make money.

Matt Watson 32:06
Well, that’s awesome. So do you also hold our hands? So if so, if I go back to hey, we need to do this r&d r&d tax credit, no idea what the hell that means. Or how to do it? Should you? Do you guys like help with like, holding our hand and like going through the process? Like, how much do you help with that part of it?

Doug Ludlow 32:21
So we try to make it as much as automated as possible. But by automated, we mean, user-friendly and easy for you to use. If you have any questions along the way, though, we do have an accountant and accounting team that can answer questions and provide guidance, again, for free as part of the service. So it’s, you know, this is one of those things to where we can technologically. In fact, you can go through without ever talking to a human being. But given that it’s taxes, and people don’t understand it, I think people are pretty comforted to find the question, they’ll have an expert right at their fingertips.

Matt Watson 32:56
Well, I don’t know about you, but taxes are the thing I don’t want to screw up. So I appreciate that you guys provide good customer service for that.


Doug Ludlow 33:03
We try, we try.

Matt Watson 33:06
Well, so what is your best advice for startup founders right now struggling with the economic crisis that is going to do you see is what you guys are doing? Does it? Is that something that can help with the economic crisis? And kind of what we’re seeing going forward here?


Matt Watson 33:23
Oh, can certainly help. Right? You should take advantage of, you know, if there are tax credits you can get, you should get them right. But it’s not going to, I think tax could have by themselves will not fundamentally change the trajectory of your business. Right? So this is a, in addition, to grab whatever discounts you can on, on software on tax credits, etc. Really, I think just controlling burn for the next six to 12 months while we’re in the middle of this crisis. That’s by far the most important thing you can do. Right? Focus on proper unit economics, if your startup is– small businesses that aren’t funded by VCs is by their nature more disciplined because, you know, it’s usually the owner’s pockets or if there’s investment is from friends and family you don’t want to blow it. So traditional small businesses tend to be more disciplined. Startups, though, you know, during a bull market, you’re not encouraged to be disciplined you’re encouraged to spend so so many of these companies now we’re stuck in an I’m so used to spending $5 million a month what do I do and I can’t do that so I guess my advice would be you know, go through cut where you can save heavy growth for later and focus on efficiency, and you’ll be well served make it through the downturn, you’ll probably emerge is one of those great businesses.

Matt Watson 34:42
Well, it sounds like some companies can save a lot of money on the tax credit side that there’s some hidden money there that they might find in their couch cushions and they didn’t know was there so I think very much that’s Yeah, that’s really awesome.

Matt Watson 34:57
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Matt Watson 35:27
Well, Doug, thank you so much for being on the show today. I’m curious if you have any, you know, last nuggets of wisdom for our listeners out there as an entrepreneur, you know, and any other final tips or advice and happy about taxes to be about?

Doug Ludlow 35:43
Something I say a lot is to avoid the illusion of progress. Right? Being a founder is really hard. And you’re, what you choose to spend your time on, really needs to be stuff that actually moves the needle, like it’s really easy to spend a lot of time talking about things that you know, for example, spending way too much time figuring out, hey, what do we want to have in our office? Or what color should this part of the logo be? Etc. Maybe sometimes it’s important, but it’s so easy to fill your plate with stuff that keeps you busy. But it’s not actually moving the needle. So I call the illusion of progress. Like, when you’re busy all day long, but you step back, no, I didn’t actually accomplish anything. I think I’ve found that my most effective times as a leader and as a founder. Or maybe where I do one key thing a week even. But the thing that mattered above all else, right, you’ll find as a startup founder, you know, maybe one or two things you do actually have a huge impact. But we initially shouldn’t rank those equally with other things. Avoid the illusion of progress, and make sure that you have money; you can always raise more money or get more money or so you can get more time. That is your most precious resource as a CEO, as a founder.

Matt Watson 36:59
I think a lot of people fall into the trap of feeling like they’re busy, but they’re not actually productive. 100% That’s the thing. I agree. All right. Well, thank you so much for being on the show today. Again, this was Doug Ludlow with Main Street, and that is Right?

Doug Ludlow 37:17
That’s right.

Matt Watson 37:18
So, if somebody wants to sign up and give this a try, and honestly not sure why they don’t. And this is in response sponsor for you guys. But sounds like an amazing opportunity. They just go to And is it all pretty automated, like setting like hooking things up to like QuickBooks and on gusto and all those things like that? Or do they start with all with you guys and go through a big process? Or how does that work?

Doug Ludlow 37:41
You can totally go and sign up on your own. You can also sign up to talk to an account executive who can walk you through the process. We want to make it as self-serve as we can. But it’s complicated, at least scary. So we also have people who walk you through.

Matt Watson 37:54
All right. All right. Well, thank you so much for being on the show today, Doug.

Doug Ludlow 37:57
Hey, truly my pleasure.

Matt Watson 37:59
All right. Thank you.