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Tax season is rapidly approaching...are you ready? Startup taxes are complicated -- every business is different and there are no simple answers. But there are best practices that can help you to avoid paying too much and encountering preventable tax problems. Join Glenn McCrae, Chief Strategy Officer of Early Growth Financial Services, and Michael Shaff, Counsel at Stubbs Alderton & Markiles, LLP as they outline your tax obligations and cover what you need to know about: - Income taxes - Compliance / Registration issues - Payroll - Sales tax - Available tax credits for startups
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WHAT DO STARTUPS NEED TO KNOW ABOUT TAXES?
Glenn McCraeChief Strategy Officer, CPAEarly Growth Financial Services
Michael ShaffCounselStubbs Alderton & Markiles, LLP
About Early Growth Financial Services
• Outsourced financial services firm providing small to mid-sized companies with an integrated financial solution
• Four platforms of services and support: transactional accounting, CFO services, tax, valuation.
• Services include: AP/AR, financial forecasts, cash management, financial statements, monthly close, 409A valuations, taxes
• 300+ successfully funded clients nationwide• #5 Silicon Valley Business Journal Fastest Growing Private
Company Award 20132
About Stubbs Alderton & Markiles, LLP
• Business law firm with robust corporate, public securities, M&A, and intellectual property practice group
• Our mission is to provide technically excellent legal services in a consistent, highly-responsive and service-oriented manner with an entrepreneurial and practical business perspective
• Focused on representation of venture backed emerging growth companies, middle market public companies, large tech companies, entertainment and digital media companies, investors, venture capital funds, investment bankers and underwriters
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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?
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?
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
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
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
Q&A and Thank You!
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Glenn McCrae
415.320.5753
http://earlygrowthfinancialservices.com/
@EarlyGrowthFS
Michael Shaff
818.444.4522
http://stubbsalderton.com/
@StubbsAlderton