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Startup Tax Strategies#startuptaxes
Glenn McCrae
Chief Strategy Officer, CPA
Early Growth Financial Services
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“Startups face a huge burden in today’s economy, often having to choose between funneling resources toward creating their goods and services or managing the often complex accounting, tax and financial strategy planning necessary to run a successful business.”
~ David Ehrenberg, Founder and CEO Early Growth Financial Services
www.earlygrowthfinancialservices.com
Presentation Overview
What does “tax” mean to a startup?
If I have a startup, what do I need to worry about, in
terms of taxes?
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5 Areas of Tax Concerns
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Income Taxes – Implication of Entity
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• Choice of entity?– Pass-through– C-Corporation– S-Corporation– Partnership
• Are you affiliated with a foreign entity?
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Income Taxes
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• Did you file for every year that you were incorporated?
• Have you taken advantage of available credits? – R&D tax credit– Enterprise zone credit
• Filing deadlines? • Estimated tax payments?• Quarterly filing?
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Compliance/Registration Issues
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• Delaware filing through February 28th
• Local municipality - municipality or HQ location determines municipality
• 1099/independent contractors vs employee determination
• Foreign contractors
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Payroll
• Are you using a payroll provider or DIY?
• Filing requirements are critical• Deferring payment of
employment taxes • When taxpayer fails to file a
return – 6020(b)
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Compensation Issues
• Options– Incentive stock options– Non-qualified options
• Profit interests• Restricted stock• Vesting• Section 409A
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Sales Tax
• Very, very complicated• Each region has its own
issues• Tax breaks• Form filing• What qualifies as a
taxable item?• Sales tax compliance tools• What happens to sales
taxes if business is terminated?
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Common Startup Tax Mistakes - Review
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• Choosing the wrong legal entity• Failure to understand tax
obligations• Not separating business and
personal finances• Not deducting business expenses• Using the wrong tools/systems (or
not using any)• Not paying quarterly taxes• Doing your own taxes, without
professional tax help
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What to Look for in Your Tax Partners
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• Representation from legal and accounting side
• Experience with early-stage companies
• Comprehensive tax offerings
• Knowledge of tax services• Audit support services
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Filing an Extension
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• Automatic extension times• 5 months for
partnerships• 6 months for corporate
and s-corp• 6 months for sole
proprietors• Extension forms
• Form 7004• Form 4868
• Estimated tax payments
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Q&A and Thank You!
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Glenn McCrae
415-234-3437
http://earlygrowthfinancialservices.com/
@EarlyGrowthFS
