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 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
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…)
