WTFAQ Archives - Wiss & Company, LLP

Series A vs. Series B: Upping the Ante With Preferred Stock

Written on October 20, 2022. Posted in Early Stage.

You crafted a clear and thoughtful pitch deck, and investors are ready to climb aboard. But even when a venture capital (VC) firm or angel investor believes in your vision, they’re still taking a significant risk with their cash. They’re going to want some special treatment and protections for bankrolling your C corporation at such a pivotal point in your journey. They’ll ask for (or you’ll offer) preferences. Commonly, investor preferences come in the form of preferred stock,...

Sales Tax: A Cautionary Tale

Written on October 13, 2022. Posted in Tax.

Sales tax. An area of the U.S. tax code that is so complex, many accountants dedicate their entire careers to understanding the nuances of the laws and guiding business owners through its complexities. This article breaks down the basics, so that small business owners know what questions to ask to ensure they comply with sales tax collection responsibilities and avoid potentially dire financial mistakes. But first, some important tax terminology Business owners do not pay or owe...

The Frustrating (but Ethical) Truth: You Can’t Invest Your Investment

Written on October 6, 2022. Posted in Early Stage.

It’s a definite high point for any early-stage startup founder: You’ve successfully wrapped up your initial round of fundraising and are sitting on a stack of cash. Investors believe in you and your product. You feel on top of the world. If you’re like many of the business owners we support, you’re probably wondering what you should do with the freshly raised capital. Certainly, if you were to come into money in your personal life, the wise thing would be to invest the money so that...

What is the Angel Investor Credit Program?

Written on March 15, 2022. Posted in Early Stage, Small Business, Startups, Tax.

What if there was a way to guarantee a return on an investment? If your business operates in one of the 29 states currently offering Angel Investor Tax Credit Programs, it may be possible. These programs are popular avenues by which states incentivize innovation, job creation, and economic growth in their region and, in some instances, encourage the development of growing neighborhoods and minority-owned businesses. Parameters of angel investor credit programs vary drastically from...

What did I do wrong? (Common traps small business owners can avoid)

Written on February 15, 2022. Posted in Early Stage, Small Business, Startups.

If you’re like most founders, when you first begin the process of starting a company, you’re focused on being compliant in every way. You aim to build a business people want to invest in. But even with the best of intentions, you could overlook some rules that have big implications. Taxes are an area in which new small business owners make frequent mistakes. It’s not intentional, they’re usually just unaware. Let’s talk about two specific tax-related errors many of our clients make...

How can I take advantage of Qualified Small Business Stock?

Written on February 8, 2022. Posted in Early Stage, Small Business, Startups, Tax.

In the early days of startup formation, it’s helpful to think years into the future — more than five years, to be exact. That’s the minimum term to which the Qualified Small Business Stock (QSBS) tax exemption applies. QSBS is a big incentive for structuring your U.S.-based business as a C corporation (or converting from an LLC) because it’s reasonable to assume your investors will someday want to exit. When they do, they could be looking to qualify for this huge tax break. What...

How Do I Exercise the Stock Options I Was Granted?

Written on February 2, 2022. Posted in Early Stage, Startups.

If you’ve been offered stock options as part of a compensation package at a startup, it may seem like a no-brainer to accept. And that’s usually true — as long as you clearly understand how to turn the initial piece of paper that grants you those options into a tangible investment on which you don’t have to pay income tax rates. It’s common to assume you should hang onto that paper and let it grow for as long as possible. But if you do, you could be in for a rude awakening when...

The Truth About Stock Options: What You and Your Employees Should Know

Written on January 26, 2022. Posted in Early Stage.

By Matthew Barbieri, Partner It’s becoming more popular to offer stock options to new hires as an incentive, especially if you’re on a limited startup budget. While you may not be able to offer new hires a world-class salary just yet, you can throw stock options into a compensation package to sweeten the deal. However, it’s easy for both you and your employees to be blissfully unaware of some key details about holding and converting stock options. To avoid confusion down...

How To Distribute Authorized Stock to Startup Stakeholders

Written on January 19, 2022. Posted in Early Stage, General Business.

It’s not often that you hear entrepreneurs tell the truth about what it takes to get a startup rolling, especially about the nitty-gritty details of how to authorize shares of stock. In this article, we’re taking away the mystery of share distribution. If you’ve already decided to set up a C corporation and learned about initial valuation, the next step is to figure out how to split shares of the company fairly amongst stakeholders — and wrestle with the math behind those decisions. Determining...

How To Raise Capital Without a Startup Valuation

Written on January 11, 2022. Posted in Early Stage, Tax.

An exciting part of early-stage startup ownership is bringing on investors who believe in your mission. But before you offer them equity in your business, you have to figure out how much it’s worth. Every startup is unique and, as with many other factors of entrepreneurial life, there’s no one-size-fits-all way to complete a valuation. However, there are some best practices you should follow when assigning a reasonable value to your company and appealing to investors with convertible...

Incorporation 101: C-Corp vs. LLC

Written on January 5, 2022. Posted in Early Stage, General Business, State & Local Tax Services, Tax.

So you’ve decided to start a business. Once you get past the initial excitement of throwing ideas around with your co-founders, it’s time to make your first big decision: how you’ll structure your organization. Choosing a corporate entity type can feel overwhelming if you’ve never done it before. And even if you have, each industry and business has unique needs. In this article, we’ll break down some important details you need to know about the two most common types of entities:...

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