Startup Compensation: Founders, Don’t Forget to Pay Yourselves (and Others)

By Dennis Kasimov and Joe Wallin In the early days of a startup, it is common for founders to not pay themselves any cash compensation. This approach is sometimes also applied to other service providers, who receive just stock option compensation. Despite the prevalence of this practice in the early days, as things progress it … Continue reading Startup Compensation: Founders, Don’t Forget to Pay Yourselves (and Others)

Tax Free Founder Stock

If you are thinking about starting an early stage tech company, one of the first things you will have to figure out is what type of legal entity to form. Fortunately, there are only a few choices available to you. Your choices are basically only 1 of the following 3 possibilities: an LLC taxed as a … Continue reading Tax Free Founder Stock

Incentive Stock Options: Post-Termination of Service Exercise Periods

The 90-day post termination of employment exercise period for stock options is under attack. A lot of companies are moving away from 90 days. You can find a list of them in a GitHub repo maintained by Zach Holman. Zach also has written an impassioned post about this issue. Why is the 90-day rule problematic? Because … Continue reading Incentive Stock Options: Post-Termination of Service Exercise Periods

Qualified Small Business Stock Options

Now that the qualified small business stock 100% tax exclusion is going to be permanent, one question that will come up more often is: Qualified Small Business Stock Options Do optionees qualify? Meaning, do holders of compensatory stock options, who exercise those options and acquire stock–can they qualify for the Section 1202 qualified small business stock … Continue reading Qualified Small Business Stock Options

Qualified Small Business Stock: 100% Exclusion To Become Permanent

In the big tax bill the Congress just passed, Congress made the 100% exclusion for gain on qualified small business stock held for more than five years permanent. You can find the text of the bill at Congress.gov. Qualified Small Business Stock You might remember that the Congress has extended the 100% exclusion several times, but … Continue reading Qualified Small Business Stock: 100% Exclusion To Become Permanent

Qualified Small Business Stock: 100% Exclusion

You might be wondering about the status of the 100% tax exclusion for qualified small business stock acquired during certain periods and held for more than five years. Late last year, the Congress extended the 100% tax exclusion for qualified small business stock acquired: 1) after the date of the enactment of the Creating Small Business … Continue reading Qualified Small Business Stock: 100% Exclusion

Finders: Recommendations to the SEC

The SEC’s Advisory Committee on Small and Emerging Companies recently issued recommendations regarding the regulation of finders. If you are not familiar with the rules, the SEC takes a very narrow view of who can help companies find investors without having to register as a broker-dealer. Broker-dealer registration is so onerous that people won’t engage … Continue reading Finders: Recommendations to the SEC

Rule 701

What is Rule 701? And if you are a startup or emerging company, why do you need to know about it? Rule 701 is a federal securities law exemption for issuing equity to employees, contractors and advisors. You need a securities law exemption or registration statement in place to issue securities, and so finding and complying … Continue reading Rule 701

Seattle Technology Ecosystem Study

Guest Post by Randy Ottinger Over 25 years ago my wife asked me to visit Seattle from Boston where we were living at the time. She is a native from Mercer Island, and most of her family is still living in the area. It was May, and the weather was sunny, just as it was … Continue reading Seattle Technology Ecosystem Study