By Jyothi Chillara, CPA, Principal
Section 1202 of the Internal Revenue Code is gaining greater interest from shareholders and investors in start-ups and small businesses. It offers favorable tax treatment for capital gains to those holding qualified small business stock (QSBS). A qualified small business (QSB) is an active C corporation with assets of less than $50 million at the point of or immediately after the issuance of stock.
According to IRC Section 1202, QSBS holders may have gains of 50 percent to 100 percent excluded from their tax obligations, depending on the date the stock was acquired. The exclusion is generally limited to either $10 million or 10 times the taxpayer’s basis in the stock, whichever is greater. (more…)
By Michael Podesta, CPA, Audit Manager
ASL Emerging Business Group
Early-stage companies have several options when it comes to obtaining seed round funding; however, selecting the best vehicle for your company involves weighing the benefits and downsides of each option. Three popular debt-based financing vehicles are convertible debt, SAFE (Simple Agreement for Future Equity) agreements, and KISS (Keep It Simple Securities) agreements. (more…)
By Jyothi Chillara, CPA, Principal
ASL Emerging Business Group
Crowdfunding is a method of raising financing for projects from the public via crowdfunding platforms and social media. Some of the most common crowdfunding platforms are Kickstarter, Indiegogo and GoFundMe. According to Investopedia, Kickstarter has raised over $2 billion since 2009.
Forbes predicts that crowdfunding eventually will surpass venture capital for investing. According to Business News Daily, ““Crowdfunding is here to stay. By 2025, the global crowdfunding market potential could be between $90 billion and $96 billion,” said Bill Clerico, co-founder and CEO of WePay, citing data from the World Bank.” (more…)
By Mark Sheffield, CPA, Principal
ASL Emerging Business Group
Historically many Silicon Valley start-ups have been unable to generate immediate benefit from the R&D credit because of having no taxable income. The law changed with 2016 tax returns. If you have qualifying research activities and expenditures in 2016, you can now use the credit to offset payroll taxes in 2017. This new and exciting benefit is for start-ups that have gross receipts for five years or less, and less than $5 million of gross receipts in 2016. (more…)
By Mark Sheffield, CPA, Principal
ASL Emerging Business Group
In a previous Emerging Business Group seminar, we talked about the importance of diligent learning. In case you missed it, here is a snapshot:
Some experts on learning say the world is changing so rapidly that only fifteen percent of what we know today is likely to be relevant in five years. So, in five years our knowledge will be 85% irrelevant unless we are diligent learners. Diligent learners are not necessarily the smartest people, but they usually surpass the smartest people, like the tortoise and the hare, in their accomplishments. They know how to persistently learn. Diligent learners are on a constant trajectory in gaining relevant knowledge; while the relevant knowledge of average learners decreases over time. Here are two attributes of diligent learners: (more…)
By Mark Sheffield, CPA, Principal
ASL Emerging Business Group
Which is the better deal for a founder: 1) $500,000 for 10% of the start-up; or 2) $500,000 for 25% of the start-up? Of course, option 1) is better because it values the start-up at $5 million vs. 2) which values it at $2 million. A start-up business valuation for investment purposes is complicated and subjective; so many founders just wing it. That’s the wrong approach because founders risk undervaluing their start-up. It is better to negotiate from a position of knowledge and strength. The complexity in determining investment value is why founders need help. (more…)
By Michael McAndrews, CPA, Principal
ASL Technology Group
Tech community, take note: new legislation may be changing the way employee stock options are taxed. In an effort to strengthen growing companies and promote stronger employee ownership, Senators Dean Heller (R-NV) and Mark Warner (D-VA) recently introduced The Empowering Employees through Stock Ownership Act (EESO), which aims to give employees greater flexibility when handling the tax liabilities associated with their stock options. (more…)
By Mark Sheffield, CPA, Principal
ASL Emerging Business Group
Yes, if you engage in business in California and sell tangible personal property that is typically subject to sales tax if sold at retail. If your business is just selling temporarily, such as a rummage or liquidation sale, you should apply for a temporary seller’s permit. (more…)
By Mark Sheffield, CPA, Principal
ASL Emerging Business Group
The marketplace for funding start-ups and ramp-up companies has been disrupted. Here’s what we see and hear on the street today: (more…)
