You’d think if the founders stick around this is consequence free. Oh no no no. Because that equity vesting over time *is income when it vests* and according to the law, unless you file an 83(b), it is valued at the fair market value *as of the time it vests.*
@patio11
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Founder Equity Vesting: Why Professional Investors Require Time-Based Ownership
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At the exact moment a company is spoken into being, it’s equity is worth almost nothing. For various reasons, professional investors will not allow the founders to own it outright at a cost basis of nothing. They will want that ownership to vest over time.
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83(b) Election Tax Trap for Startup Founders Explained
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“Can you walk through, for a non-specialist, how failure to have an 83(b) election bankrupts founders?” You have to pay taxes on all income earned in a year, right? Equity compensation is a form of income, right? That sets the stage for the time bomb.
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Stripe Atlas Legal Updates Impact Startup Documentation Standards
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(Here that is Stripe Atlas but presumably YC’s lawyers, early stage VC firms, etc will all update their standard packets to take advantage of this.)
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83(b) Elections: The Hidden Tax Trap for Startup Founders
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83(b) elections have been a long-time landmine for startup founders, generally underdiscussed because of social considerations. You don’t want to say “Hiya, I’m the sophisticated CEO of a high-flying company. Also, oops, bankrupted myself for want postage stamp six years ago.”
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Small Decisions Shape World Systems
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You’d be surprised how much of the world is extremely dependent on very small decisions which do not necessarily announce their importance to the people capable of making them. Here’s one:
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Major financial firm’s internal API for company creation raises questions
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I have a certain professional regard for "Yes, we're a multi billion dollar financial services firm that has an internal API which creates companies because ehhh seems like that is a useful capability to have."
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Financial Institution Spins Up Legal Entity Automation Online
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"You are this mystified by a financial institution being able to do an online account opening?" Permit me a tiny bit of discretion here, because I think explaining what they did might identify the firm, that they spun up (or will spin up) a legal entity almost live on call.
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Seamless Account Opening Automation Workflow Goes Live Successfully
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I won't name them but the account we set up live on the call actually worked and then there was an account opening questionaire web app which worked and then there was a Docusign which worked and I feel like I am living in the #$*(%#(% future.
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AI Agent Bypasses Financial Sophistication Verification Protocol
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Me: If I say 'I am financially sophisticated' does this let you skip questions.
Rep X: … It. Does. Wow, this is easier than this usually is.
Me: So if we can move forward.
*2 minutes later*
Me: Are we… done?
Rep X: We are… done. Wow.
Me: And the next step is *repeats.*