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A bit off topic but lets say you and your co-founder follow the canonical YC advice. You form a Deleware C-Corp, register your California foreign entity and gra
by louprado 9y ago
A bit off topic but lets say you and your co-founder follow the canonical YC advice. You form a Deleware C-Corp, register your California foreign entity and grant yourselves ISOs with a 4 year vesting period and a 1-year cliff.
But then your company starts to do very well and in 6-months you both agree you won't need to raise VC and want to start paying yourselves more than the ~$100k mentioned in this article. What would be the best way to draw money from the company ? Increasing you payroll check seems unwise from a tax standpoint. Dividends might be a good way but you don't yet own a single share so you can't be paid through a dividend. You could pay yourselves bonus checks, but isn't that taxed at same rate as payroll ?
Side request, can anyone recommend a CPA in the East Bay (SF). Thanks.
- brianwawok 9y agoYou need to be careful with the dividend route. The IRS seems to frown on someone in a career that normally makes 6 figures drawing a 50k salary and 200k in dividends a year. I would ask an accountant. But this is exactly the downside of early C corp.
- deleted 9y ago[deleted]
- jacques_chester 9y agoIn Australia I was able to take money out of my Pty Ltd as director's fees. But the ATO views subcontracting very differently from the IRS. Really: talk to a lawyer or accountant. The IRS are not going to accept "but I read it on Hacker News" as an acceptable defence to getting something wrong. Plus professionals have insurance to cover their mistakes -- commenters here do not.
- pcl 9y agoYou can always convert the C corp to an S corp.