Cool perks for hiring (darn developers) and the tax consequences

Some folks are coming up with interesting perks like zero gravity experiences and other ideas(outside of signing bonuses which evidently bore developers) to attract new talent.

I was talking with one entrepreneur on Wednesday, and he asked how that was taxed – was it W-2 income to the employee after they got hired or could it be written off as a business expense.

Intrigued at the question I enlisted the help of a colleague that does a bunch of the tax returns for the entrepreneurs we represent, Melany Diaz (she is great). She quickly got back to me that any fringe benefit you provide is taxable and must be included in the recipient’s pay unless the law specifically excludes it. That sounded bad but I decided to go deeper in the abyss and explore the exclusions, who know maybe zero gravity experiences could qualify…wierder things are in our tax code. Continue reading

Learning Twitter … @stammy got me started … how do you help your ecosystem?

Yesterday night I saw an interesting tweet from Paul Stamatiou (‏@Stammy to his Tweeps), it said:

“When was the first time that Twitter “clicked” for you and you understood it?”

I’ve actually been thinking about how I got started on Twitter ever since @stammy took his job at Twitter.

Three years ago I got that this Twitter thing was powerful, but I had no idea how to get started (being a part of a CPA firm comes with a lot of perks but being cutting edge on social media three years ago was not one of them). Anyway I was judging the Top 40 Innovator’s of Georgia and I found out that one of the other judges knew a thing or two about Twitter (@stammy).
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Top 5 questions for 2012/2013 tax credits #leavenomoneyonthetable

I asked Anne Yancey, who is the best at identifying state and federal incentives for my clients, to come up with the top 5 questions that trigger a potential tax credit (i.e. state and federal money woo hoo!).

Most incentives are available for businesses that engage in any of the following industries: manufacturing, warehousing, distribution, information technology, clean energy, financial services, telecommunications, research & development, life science, defense.

Here are the questions she came up with for us:

1. Is the company expecting growth in 2013 or in the next few years (i.e. adding new employees or new/replacement assets? Has the company added at least 5 new jobs or $1M in fixed assets at a single location in the prior 3 years?

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Sh*t My Dad Says and the Fiscal Cliff

My wife and I listened to the book Sh*t My Dad Says by Justin Halpern over the break and it just cracked us up. While my dad is nowhere near as quotable, I’ve always appreciated his view on taxes. He is a small business owner that has had a steadily growing business for the last 30 years.

Years ago my dad and I were talking about taxes, I was asking his thoughts about taxes going up and his answer shocked me.
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Replacing stock options with restricted stock – question received

Recent question received (data/names changed):

The board just approved the issuance of 50,000 shares of restricted stock to an employee to vest over three years.

His 100,000 options that he received last June when he was hired will be cancelled.

Would this be considered substitution?

My response:

Here is the technical guidance for that very issue:
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2012 Technology Summit interview

Last year I did an interview with Business Radio X at the Technology Summit – it is attached here for your listening pleasure.

Topics covered: top innovators from 2012, tax credits, startups.

TheTechCPA at the 2012 Technology Summit

My first time to link to an audio file on another site – so hopefully it works.

I’m scheduled for my next Business Radio X interview on January 7th – what should the next topics be?

Business combinations – recent question received

Recent question received (data/names changed):

I have a brain puzzler relating to acquisition accounting that I’d like to run by you. In thinking through the proper way to account for the intangibles that are on the books when our company was acquired by Acquisition Co., what happens to those after the acquisition? Do they remain on the books?

For example, let’s say we had $2,000,000 of Customer List on the books with $500,000 of Accumulated Amortization. When acquired, do these zero out? Or do they continue to amortize?

My response:

The old intangibles do go to zero. However, then under the business combination rules you would do purchase accounting and establish new values for those intangibles and record those as a part of your purchase price allocation. Then you amortize at the new values.

Additional thoughts:
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How to get the most out of a venture conference

Venture conferences can be great gatherings to feature technology companies for a region. It occurred to me at a recent venture conference that many of the tech companies did not fully take advantage of the conference merely because they hadn’t been through the process 1) ever or 2) in quite a while.

So here are some thoughts to consider if you plan on participating in a venture conference:

Raising money – are you asking the right questions?

There are always tech companies that are considering raising money.

I’ve noticed an interesting question founders ask of me and other advisors lately: “Do you think I should raise money?”

While I think that is a great question, I think that will get you a lot of people trying to say what they think you want to hear. I’m not suggesting that you don’t ask that question but maybe try following it with: “What would you do if you were running my company right now?” By phrasing it that way they shouldn’t be trying to predict your feelings, now they are more likely to give you an honest assessment.

Much more interesting answers to that question coming from your lawyer or accountant I predict.

Why?

Remember when you are talking to advisors, you are talking to people who have picked a lifestyle business over a company with home run potential. Some of us have even tried the home run company and had our exit and still picked a lifestyle business. So I predict if they answer honestly, they are going to give you a fairly conservative hunker down kind of answer that might challenge your current thinking. It will definitely be different from the Instagram perspective.

So if you are raising money and you are seeking real advice then I recommend planning out who you want to talk to then writing down your questions?

Should I raise money?
Would you raise money?

What other questions would be must asks to get a balanced view that challenges a CEO’s thinking?