We live in exciting times here in the San Francisco Bay area! It seems like the.com bubble is back again, this time stronger and more stable than ever. Perhaps, however, those are famous last words. Who knows?
As one of San Francisco’s top CPA firms, we relish the opportunity to work with small businesses and new startups, whether or not those are in technology. Most of the time, the owners of the startup come to us because they need financial advice, things such as which type of business organization to choose, how to deal with employees, stock options, and the possible tax implications of success.
Startups, Failure and Tax Planning
But what are the implications of failure? Indeed, in the San Francisco Bay area, many people talk about their failures with as much pride as their successes. So if you have a startup, or work for one, or are thinking of beginning this endeavor, think a little bit about failure. For example, many of the quote unquote startup expenses for any type of business are tax-deductible. Even if the business fails, those losses may be able to be used to offset income from other categories.
Another example is stock options. On the upside if you are an employee and are going to receive stock options that will be incredibly valuable if your company is the next twitter or Facebook, that’s great. But on the downside, if you are compensated in stock options in a company that fails, you have received nothing. There is a risk and reward trade-off here.
We are incredibly excited about all types of startups, and all types of new business ventures. Many different types of people walk into our San Francisco offices on Gary Street, and we have worked with many different times of startups. But, our role as the quote unquote boring CPA firm, is to bring a dose of reality to the wonderful enthusiasm of your startup. We can advise you on important things such as how to structure compensation, buy sell agreements, how to compensate employees, and how to prepare for both the upside and the downside of your Bay Area startup.
If you work for a startup, or are starting a startup (no pun intended), give us a call and we can customize a strategy for you to succeed even if you don’t succeed.