Ask HN: Joined a startup? Your taxes are about to get complicated. Questions?

8 points by brntsllvn 2 years ago | 13 comments
I'm a tax nerd and software developer. What startup tax questions would you like answered?

Example: what the heck is 83(B) and will it save me money?

  • yellow_lead 2 years ago
    Is there any way a pre-IPO startup can give equity without imposing a tax burden on employees?

    For instance, if an employees options vest, I believe they are required to pay taxes on the computed value of the shares. But in i.e a pre-seed company, there may be further dilution, so you end up paying tax on something that is lost in the end.

  • ThrowAway0127 2 years ago
    What are some great resources to learn personal taxes and all of the forms, deductions, exemptions, etc?

    What are some resources for understanding business taxes? (LLCs)

    I have a small single member LLC and want to understand more about how/when I need to file, what I can add to the list for deductions, etc.

    • brntsllvn 2 years ago
      Great resource: https://www.linkedin.com/in/markjkohler/ follow him and learn

      Biz tax is a deep topic. Short answer is the LLCs are passthrough, which means you'll receive a k-1 from your accountant that you include in your personal return.

      Quick strategy tip: have your accountant apply for S corp status for your LLC. You'll pay less tax right away.

      • psyklic 2 years ago
        Note in CA, there are additional reporting requirements. This is not tax advice, but I believe passthrough single-member LLCs (including no-income) must file Form 568 by March 15 and pay a mandatory $800 annual fee by April 15. (Other types/taxation methods could have slightly different requirements.)
        • jawmes8 2 years ago
          Can an S corp be single member? What are the drawbacks to using an S corp as opposed to an LLC?
          • brntsllvn 2 years ago
            S Corp is just a tax filing status. Your legal entity remains an LLC.

            The benefit of S Corp tax status is that you pay yourself a dividend in addition to your income. They are taxed differently.

            The drawback is you now have a payroll obligation.

            An LLC can be single member. An LLC with S Corp tax status cam also be single member.

            There's a lot of info about S Corp status online. Hopefully this puts the strategy on your radar for more investigation.

      • momofuku 2 years ago
        Actually, I'll be joining a startup-ish in about 1.5 months. I am an immigrant and this will be my first job out of school. What do you mean taxes are about to get complicated :eyes:
        • brntsllvn 2 years ago
          When you're compensated in private shares, you still owe tax on them.

          With public companies you typically "sell to cover" when you vest, but this isn't possible with private shares.

          The workaround is the 83(B) election.

      • infamouscow 2 years ago
        I'd be interested to learn more about if or how stock priced exclusively in BTC (i.e., never in USD) affects taxes.

        Any info you could share would be appreciated :)

        • brntsllvn 2 years ago
          I'm assuming you are US-based. If you receive compensation in stock, no matter the currency denominator, it is income and is therefore subject to income tax.

          Your employer should produce a W-2, and your share grant will be included.