Our Most Read Blog in 2014 Was About…Taxes?
For all that most people tend to not want to think about taxes and the IRS, our most read blog in 2014, Startups, Stock Options, and IRS Section 409A: Fair Market Value, was about the tax consequences of valuing stock options.
This detailed discussion, penned by CFO-in-Residence John Schroepfer, addresses the two types of stock options recognized by the US tax code—qualified (or statutory), which include Incentive Stock Options (or ISOs) and nonqualified options (NQOs).
CFO-in-Residence Serves TechColumbus Clients
When we told John that his blog was our #1, he suggested that maybe the blog’s discussion of stock options—the favored method of deferred compensation for startup teams everywhere—made the technical tax medicine go down a little easier.
He might be right about that; however, we think the Section 409A blog received so much attention because the topic is relevant to most startups and John has a great way of making complex financial and taxing issues understandable.
And that gets to the reason TechColumbus invests in a C-level executive-in-residence like John. He’s a valued team member, available to provide the type of guidance and assistance to entrepreneurs and startups as the CEOs and officers of major corporations receive from their in-house CFOs.
Except that TechColumbus clients receive John’s services just by being TechColumbus clients. In-residence expertise is a cornerstone of our Venture Acceleration process.
Neither John (nor anyone else at TechColumbus) provides tax advice, but among the many finance topics he can help with, John can and does alert entrepreneurs to matters they should be discussing with their tax advisors. He helps our clients understand the issues so they know the questions to ask.
A New Year’s Resolution: Become Sales and Use Tax Savvy
With tax season just around the corner (although as John reminds our client entrepreneurs, it never really left), we asked him to call out another area of taxation that entrepeneurs should focus on.
He suggested the treatment of sales and use tax.
The rules are determined by each individual state, so while adhering to the Ohio rules is critical, there are 45 other states with sales tax rules to consider,” he said.
“Although there are similarities, each state is a little bit different, so the issue can become complicated,” said John. “Companies are so focused on getting the right product to the right customer, and rightfully so, but oftentimes they haven’t paid enough attention to sales and use taxes which can create greater problems for them down the road. “
The issue is especially relevant to software companies and companies with an e-commerce element to their business. States tax authorities have long recognized the various ways software is being sold and the increasing volume of products being sold using electronic commerce. The tax rules are changing frequently to adapt.
“States often have voluntary disclosure programs,” John said. “A company can submit their information (sometimes anonymously), pay the past due tax and interest, and start with a clean slate as long as they register with the state and pay the tax going forward. It’s much preferable to an audit by the state which can lead to other tax findings.”
John will be blogging more on the topic of sales and use taxes as we move into the year, so watch this space.
And just in case you aren’t entirely turned off by the mention of tax and missed our #1 2014 blog, read it here.