The Startup Law Blog
Practical legal guidance on QSBS (Section 1202), equity compensation, startup formation, financing, and Washington State tax issues for founders, investors, and startup employees.
Latest posts
Washington Now Expects 25,000 Households to Pay the Income Tax, Not 21,000
The Department of Revenue quietly revised its estimate from 21,000 households to 25,000. The 4,000-household difference is threshold drift, and sections 314 and 316 of ESSB 6346 make it structural.
Deferred (and Unpaid) Salary: A Trap for Founders
Deferred founder salary is a two-headed trap: personal liability for double damages under Washington's wage statutes, and a 20% Section 409A penalty on the recipient. Here's how to structure pay correctly.
BOI Reporting Is Over for U.S. Companies: FinCEN's Final Rule, Explained
FinCEN's final rule, effective August 14, 2026, permanently ends beneficial ownership (BOI) reporting for U.S. companies and U.S. persons under the Corporate Transparency Act — and FinCEN will delete previously reported U.S. person data.
Never Signed Your Founder Stock Purchase Agreement? You May Have a QSBS Problem
Missing certificates don't hurt QSBS — but a missing issuance does. No signed SPA, no board consent, no payment can move your §1202 holding period and gross assets test years later than you think. Usually fixable; fix it before diligence.
Sell the House, Ship the Ferraris: The One Big Gain Washington's 30-Day Rule Actually Saves
Washington allocates gains on stock by domicile, but gains on art, jewelry, and collector cars by residency and property location. Domicile is irrelevant under RCW 82.87.100(1)(a) - which makes the 30-day safe harbor a statutory shield for a collection sale, not just evidence.
Seattle's Payroll Taxes in 2026: The JumpStart Tax, the 5% Excess Compensation Tax, and What They Cost a Startup
Seattle layers two payroll taxes on employers in 2026: the JumpStart tax (0.746%–2.557% above a $9.07M payroll threshold) and a 5% tax on compensation above $1M with no threshold at all. Options are out, RSUs are in, and the sourcing rules for hybrid work are the planning lever.
Rule 701: Who Can Receive Startup Equity, How the Math Works, and the 2026 SEC Guidance
Rule 701 lets private companies grant equity compensation without SEC registration — if the recipients qualify and the rolling 12-month math holds. The complete guide, updated for the SEC's March 2026 guidance.
Washington Capital Gains Tax vs. the New 9.9% Income Tax: How the Two Interact
ESSB 6346 strips capital gains from the income tax base, adds back the Washington-taxed gain, and credits the capital gains tax paid. Your gain bears the greater of the two regimes — and for high earners, that means 9.9%, not 7%.