Example: what the heck is 83(B) and will it save me money?
For instance, if an employees options vest, I believe they are required to pay taxes on the computed value of the shares. But in i.e a pre-seed company, there may be further dilution, so you end up paying tax on something that is lost in the end.
Answer: ISOs are one way. Although I'd clarify that employees will pay tax, it's just a matter of when.
Learn about ISOs here: https://turbotax.intuit.com/tax-tips/investments-and-taxes/i...
What are some resources for understanding business taxes? (LLCs)
I have a small single member LLC and want to understand more about how/when I need to file, what I can add to the list for deductions, etc.
Biz tax is a deep topic. Short answer is the LLCs are passthrough, which means you'll receive a k-1 from your accountant that you include in your personal return.
Quick strategy tip: have your accountant apply for S corp status for your LLC. You'll pay less tax right away.
The benefit of S Corp tax status is that you pay yourself a dividend in addition to your income. They are taxed differently.
The drawback is you now have a payroll obligation.
An LLC can be single member. An LLC with S Corp tax status cam also be single member.
There's a lot of info about S Corp status online. Hopefully this puts the strategy on your radar for more investigation.
With public companies you typically "sell to cover" when you vest, but this isn't possible with private shares.
The workaround is the 83(B) election.
Any info you could share would be appreciated :)
Your employer should produce a W-2, and your share grant will be included.
