We have quite a few people come to us here in San Francisco who have that dreamy eyed appearance of someone who has the next big idea. Often, the idea is hatched out of their basement or garage, or in other situations it is one or two key people who are what they call serial entrepreneurs. In many cases, one of the key issues is that of executive compensation.

In terms of a startup, it often gets to issues such as one’s actual salary, deferred compensation, or stock options. As one of the accounting firms in the bay area that specializes in startups, we often help the founders brainstorm the best methods to govern their executive compensation.

StartupsAs part of our new tax guide, however, more established businesses can read about some of the issues in terms of executive compensation with respect to LLC’s, partnerships, and even S corporations. Vis-à-vis the tax code, there may be opportunities for tax savings through such strategies as postponing a big purchase, or accelerating a purchase. Another issue may be how much compensation is taken as salary versus how much compensation is taken as flow-through income.

Changes to the Tax Code and Executive Compensation

Finally, there is the issue of potential changes in the tax code. With the current struggles in Washington between Republicans and Democrats, and the uncertainty around the 2016 presidential election, it is anyone’s guess, how tax codes will change in the future. In some, therefore, there can be the issues that startups face, which is often the intersection of cash flow and executive compensation, or the issues surrounding stock options, or in more established businesses, the issues may be more traditional, such as whether to take compensation in this year or to do for it to the next.

Whatever type of executive compensation issues you are facing, and especially if you are a new bay area business or start up, please do not hesitate to reach out to us to discuss how to structure your executive compensation.