Accounting. Accruals. GAAP. These words are probably not the first things that pop up in the mind of a startup founder as he or she assembles a team, develops a product, acquires customers and runs a business. As CPAs, though, we believe that these and other related issues a should be treated as critically as any other business decision.voices
I have written before about the tax benefit to investors from investing in a Qualified Small Business. The fact sometimes gets lost, but a company founder is also eligible for the tax benefit of excluding a portion of his QSB gain when he sells his interest. (State and local tax rates vary.) Because the law places limits on the tax benefit, careful planning by a founder is required.
Taxation of Qualified Small Business Stock: Congress Offers a Large Benefit, if You Can Squeeze into a Small Window
While tax planning should not be the determining factor in making an investment, it certainly should be a factor. That is why, for at least the past 18 months, we have considered the qualifying small business status of a company in which we are looking to invest. Two tax planning ...