
Offer HN: Tax Help for Startup Entrepreneurs. - camz
With everyone offering their services, I felt that I should put my hat into the ring too.<p>Background: I'm a tax accountant with years of experience in PwC and KPMG (Big 4: look them up and you'll quickly see they're like the google and microsoft of accounting firms.)<p>I've had experience in federal tax specializing in REITs and real estate tax at PwC.  I specialized in state and local taxation at KPMG.<p>Federal work related to 1120, 1065 and Disregarded Single-Member LLCs<p>State and Local: Income/Franchise, Sales, Payroll, VAT and Unclaimed Property<p>I currently have my own firm where I work with small to midsize clients.<p>You can pretty much ask me anything you’d like about tax.  I’ll be pretty honest with you and let you know if I’m out of my depth.  If you have any questions you can check me out at www.thekenggroup.com and contact me at contact@thekenggroup.com or just reply.<p>Cheers
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rdl
Speaking of offers of assistance, if any (US citizen, non-felon, responsible,
fairly competent, preferably either prior service or at least compatible with
the military in terms of putting up with bureaucracy) wants help getting into
DoD contracting (sysadmin or development), I'd be happy to provide advice. I'm
no longer actively contracting, but working on a tech company which will have
DoD clients, but I still know a lot of people. Deployed or stateside.
ryan.lackey@gmail.com.

~~~
icegreentea
Slightly off topic, but seems as good a place to ask. How hard is it for
foreigners (read Canada) to get a DoD or one of the big military contractor
gigs?

Wanting to get into aerospace (any part of it) here, and Canada's aerospace
industry isn't exactly big. Being barred from US Mil aerospace seems like
having another big glob of jobs put out of reach. Thanks!

~~~
rdl
I really have no idea on Canadians; you certainly are limited, and I think the
standard solution here is to get a Canadian clearance and then use the
bilateral canada/us or NATO matching to participate. Sorry!

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davidu
I think it'd be useful if you'd explain to folks on HN the tax implications of
exercising their options (or holding shares) of their company stock over a
5-10 year period as it increases in value but not in liquidity.

For example, someone with stock purchased at $0.01/share that has a new 409A
common stock value of $1.00/share may have a substantial tax consequence,
despite not having any actual liquidity. You can discuss this better than I
can.

~~~
camz
Stock options are a loaded question but I’ll discuss it in general terms.

There are two types of stock options. Qualified and Non-Qualified.

Qualified stock options are those given to employees. So, all of the first
employee hires that get equity are essentially going to get qualified stock
options because they are getting an incentive. These options are not included
in your gross income, but you may have to pay taxes on the year you exercise
them due to the Alternative Minimum Tax (this was meant to be a tax on the
rich back in the 1970s but now its hitting everyone in the middle-class).

Non-qualified stock options are those that you get if you’re not an employee
generally. This means that you’d have to include the value of stock options in
your gross income. This is where Section 409a hits you. Section 409a has a
bunch of requirements as to when you are allowed the options for example:

1\. The employee’s leaves or separates from the company (if you're a key
employee, then you need to wait 6 months later, before you can get the
distribution of options.) 2\. The employee has an unforeseeable emergency 3\.
The employee becomes disabled 4\. The employee is dead 5\. A fixed time or
schedule specified under the plan 6\. A change in ownership or effective
control of the corporation, or a change in the ownership of a substantial
portion of the assets of the corporation; or

In reality…

If you’re a startup and you’re giving options, there’s no way for the IRS to
make you include these options in your income because they have no real value
yet. The IRS requires income to be (1) accurately determinable and (2)
reasonable assured. As we all know, options and common stock equity in
startups is anything but determinable and assured. So realistically, this
won’t make a difference initially. But, once you start getting traction and
get valued from VCs, this will come back to bite you.

You could also choose to use a variety of valuation models. There's even a
"startup model." The startup model is basically where the VC thats funding you
will tell you what the valuation is lol.

Conclusion: Stock options are not part of gross income if your getting
qualified stock options.

But, later on when you sell the stock or equity. It'll lead to capitals gains.
By then, you'd probably of had the equity for over a year so they'd be long
term capital gains, which are taxed at 15%.

sorry for the long post. its late and i'm probably babbling.

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dangrossman
What's a simple tax tip you give individual small business owners (sole
proprietors or disregarded single-member LLCs) to reduce their tax burden,
beyond simply claiming all business expenses? Once past the phase-out point
for most tax credits, any easy tips to reduce taxes further -- perhaps a good
place to invest savings without low income limits or an often overlooked
deduction?

I usually end up paying taxes on the full amount of my business's profit, and
I don't really know what else I can be doing. I was once told to get a Roth
IRA but the income limits are too low.

~~~
camz
Why not look into SEP, simplified employee pension plans. The limitation for
last year and this year is $49,000. You sound rich lol, so why not just get
this plan and start socking away money. You can put up to the lesser of 25% of
wage income or 20% of self-employed before self-employed tax deduction is
included (turns out to be about 18.25%)

Other options depends on what you're income is. But SEPs are great ways to
just shove massive amounts of money away.

Note: If you have employees, the SEP can get a bit annoying and complicated.
Its best for the small business owner that is operating primarily on his own.
but, it could still be a great idea, even if you have employees.

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kmfrk
1) Which states are preferable in terms of tax in a start-up? If there is any
states of particular preference at all.

2) My impression seems to be that registering your company in Delaware is more
of a priority "down the line", even though it seems to be the go-to place for
many companies. Is Delaware the place to go, or what is the current wisdom?

3) If I move from a European country to the US, should I expect to be taxed by
the country where I spend more than six months a year, or are there things to
look out for such as the risk of double taxation?

~~~
rdl
1) The state where you are physically going to be present is going to want to
tax you. If you incorporate in DE (zero tax basically, some fees and such),
but are physically running the business from San Francisco, you owe the CA
Franchise Tax Board all income tax.

2) DE is basically the correct choice (and C Corp) if you plan to take outside
professional investment, maybe sell the corp, etc. And doing it properly will
cost about $5-10k; probably closer to $10k if some of the principals are non-
US-Citizens.

For any other business, you could consider C or S corp or LLC in your state-
of-intended-operation, to lower costs and hassle (so you only have to file
with one state). If you base yourself in Nevada, you pay no tax and cheap
filing costs; if you base yourself in NYC, ouch.

Of the "startup friendly states", I think TX and WA have the best tax
situations, but both have a weird corp tax (basically, on your gross receipts,
vs. profits), which can actually be worse for an R&D intensive business
(negative profits for a while) or a low-margin business).

3) This depends on the specific country you're moving from (i.e. where you
hold citizenship), the visa you're on in the US (if you're not a US citizen),
etc. There are pairwise double taxation agreements between countries, and I
think some EU-USA stuff. It also depends on the kind of earnings you have --
if it's wage income, for work performed above-board in the US, you'll be
paying US taxes + medicare/social security, and probably crediting that
against your possibly-higher foreign-citizenship taxes. If it's capital gains,
it depends on where you are when you realize them, and what visa, etc. you
have. It's complex.

~~~
camz
I think that RDL is giving valid and valuable advice. Generally speaking WA
and TX has no income tax for personal and businesses, but the gross receipts
is almost always going to hurt more than the average income tax because of the
huge tax base.

For example, if your selling ads and your only making a margin of 30 to 10
percent. The base of your gross receipts is going to include the full amount
and not just your cut of the profit.

Texas is known for having some of the worst gross receipts taxes. Michigan GRT
and BRT as well as the Ohio CAT are horrible. So beware of those pitfalls.

But, again I think you should definitely head RDLs advice!

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barrydahlberg
This seems likely to be a common situtation so I'll keep it out in the open
for other people to read.

I'm based in New Zealand and do my accounts here. I rent virtual machines in
the US which run websites etc. NZ and US have some kind of dual tax agreement.

What do I need to know about US tax?

Thanks for the offer and any advice given!

~~~
pelle
Just having servers in the US does not mean you're doing business in the US.
What is important is where your nexus of operations is or if you have actual
staff working in what could be considered a branch in the US.

In the early days of the internet, several US citizens setup servers in
offshore jurisdictions and bragged about it. The IRS quickly established that
server location does not affect nexus and the offshore server owners ended up
having to pay US taxes.

This all expects you are not registered as a company in the US. In theory if
you have a US LLC with no real operations except outsourced hosting in the US,
there would be no US tax liability either as LLC are pass through entities. A
c-corp is not passthrough and you would probably be taxable in the US. Any
dividends and capital gains would be under double taxation.

I am not a lawyer, accountant or anything. I just know a lot of people who do
these kinds of things.

~~~
camz
Nexus is a state and local tax concept. Nexus is defined as the "minimum
connection necessary for a state to tax a taxpayer." Generally, there are
three factors that lead to nexus (there are more but i'll give you the
basics.)

If you have employees in a state then you have nexus (this may include
contractors as well). If you have ANY type of property or rental in the state
then you have nexus. If you have significant economic connection to a state
then you have nexus (notice this is a very subjective and BROAD concept.)

Having servers in a foreign country isnt really important because YOU the
owner = nexus to the state that you're living in. So, your state has the right
to tax you.

The IRS doesn't care about your nexus because they dont have that rule. The
IRS is the shit because they dont deal with silly questions of "the relation
to income earned and the US." Their rule is simple, "All income you earn is
taxable period unless we say it isn't"

------
catshirt
Hi Camz... first of all thanks for all the posts here. Learning a lot.

I know someone who got offered employment (via internship) with KPMG before
they graduated (ie. they've not yet started). Do you have any advice for a new
employee who is interested in startups?

Or more generally I suppose, do you have any career advice for someone
specifically interested in accounting and technical startups?

~~~
camz
Hey Catshirt, sorry for the slow reply but I lecture and that takes a lot of
time haha.

Im sorry to tell you that you have a difficult road ahead of you. Public
accounting is rough because you'll be abused with hours of overtime that makes
you think you might as well create a startup, you be dealing with BS politics
all the time, you're going to be undervalued and under paid.

I tell you this because you should know the shit storm thats coming. Knowing
how rough it is will put you in perspective and help you deal with those rough
days. Public accounting is meant to provide you years of experience in a short
period of time. You can equate 3 years of experience to 1 year at a big 4. So
the long term goal is to either become partner (which is a pretty shitty
option) or to leave and get a cushy job as a manager, director, VP or CFO at a
company and do nothing.

As for your own personal dreams and aspirations its going to be nonexistant
your first year or two because your working, learning and trying to get a cpa.

But, like i tell everyone. If you want to do something, then stop sleeping.
lol. i know it sounds like a joke but im serious. sleep vs success is a choice
you're going to have to make in the accountant/law field.

I hope that Ive been helpful haha. and sorry for being a debby downer but the
uninitiated need to know the truth.

------
dangrossman
I'd like to hear your opinion on the tax implications of selling an ecommerce
website. In my case, it was a website that sold a single digital product. I
sold the website code, the product code/copyright, the customer database and
mailing list, advertising copy and 60 days of support for a single price. I
operated this website for over a year before selling it. I am in PA, USA and
the buyer is in Australia, and we did not break down what part of the purchase
price corresponded with any individual element of the sale.

I talked to several accountants and 3/4 said I can claim it as a long term
capital gain. 1/4 was unsure since part of the value is the software
copyright. Am I safe to claim this as a LTCG at 15%?

~~~
camz
Hmm.. thats a complicated set of facts. I hope that the sale was done through
a stock buyout instead of a sale of assets.

When you sell a company there are two major methods. A complete sale of assets
(which it sounds like you did) and a sale of stock (which is preferrable).

the sale of stock would guaranty you long term capital gains.

I'd say that you should be taking a capital gain on everything generally

But, intangibles like copyright are funny. The creator can sell the copyright
and sell it, but when you sell it theres a problem. How do you determine the
basis of the copyright. Generally, companies buy copyrights and etc so its
easy for them to have an adjusted basis or cost for them to calculate. But,
you developed and created the copyright so your basis is probably going to be
pretty small and the gain is going to be HUGE. You can say that you're hours
spent is an increase in basis. Same rules apply to songwriters and etc.

You can sell the IP, but the gain is going to be significant.

~~~
dangrossman
Thanks for the feedback! I don't mind claiming the amount of the sale as a
taxable gain, the only bad scenario would be having to claim all or most of it
as ordinary income. This was just one website of many I operated under an LLC,
so I didn't sell the whole company, just some specific assets. It was done on
Flippa, the eBay of website selling, with a sale price of $90k.

~~~
camz
I'd highly suggest that you separate your websites into different llcs because
of a variety of reasons. Firstly, liability is rarely a serious issue in tech
but it's always better to be safe than sorry right?

Secondly, by separating the assets you can make sure that upon a sale, the
exit would go much easier and smoother generally. Making a purchase of stock
is generally easier than buying individual assets. Also, you won't need to
allocate the price of the sale to all of the assets based upon the fmv of the
assets. Basically, it'll also save you money on legal and accounting fees.

Thirdly, selling through a llc or legal entity In general is great because it
also leaves room for tax planning strategies. Ex, if sell based on assets
you'd have to pay tax on the sale of personal property. Most propel don't even
know that there's a tax on personal property or what personal property is.
But, a sale through stock generally helps you avoid this type of exp. Learned
this dandy trick in my stint in m&a.

------
ajju
Simple questions that are suddenly (more) important because we have just
become cash flow positive and now have non-trivial revenues.

1) Do we need to charge sales tax on software as a service? Our customers are
large organizations spread all over the country. Whatever research I did
suggests that as a service, this should not entail sales tax.

2) Other than payroll taxes, income taxes and 1099s for contractors, are there
any other taxes I should be aware of?

3) So far our accounting has been me noting expenses and revenues in a
spreadsheet and making sure I have all the receipts. Do we need to start
maintaining formal accounts per law? (Even if not, I have already retained a
part time accountant to do this..)

Thank you!

~~~
camz
Awesome question!

Sales tax is a crazy world for software developers because there's a shitload
of exceptions and rules. I'll tell you the general rule though.

Software is taxable IF

(1) it is a retail "off-the-shelf" program. A retail "off the shelf" program
is anything that you created to be sold without further customization. So any
standard program your selling copies of would be required to pay sales tax.

But, if you customized the software then it could be exempt from sales tax.
because then it would be considered exempt under the professional services
exception.

This is a very complicated area of sales tax because its new. I actually have
a 50 state matrix somewhere that gives detailed instructions on every state
that i prepared for a client. Its a fortune 500 company so i cant say its name
but if youve ever done ANY financial or legal research, then you're using
their name. I'll probably post it up later on as a separate HN post.

2\. Well for payroll, its a complicated area because you have federal, state
and city withhold taxes, plus FICA, Medicare, FUTA (Unemployment) and others
so u want to make sure that this is done correctly. Trust taxes are payroll
taxes and if u F-BOMB this up, then you are PERSONALLY liable. It is one of
those taxes that if u screw up, the IRS is going to literally levy you bank
account.

Also, if your in NYC. We have a bunch of special taxes =D. For example, you
get to pay taxes on your rent. the CRT or Commerical Rent Tax is a tax that
people in manhattan have to pay if they pay more than 250k in rent LOLL. So,
it really depends where you're located and how your business is being run. You
should email me privately to discuss this further if you really care too.

3\. Well, if u hired an accountant then they should know what they're doing.
(Assuming they're qualified). But, YES u need to keep records of everything. I
suggest you scan everything because it makes life easier. But, honestly it
doesnt matter how you're keeping track as long as you ARE keeping track.
Obviously, there are better ways to do it but thats for another discussion.

~~~
ajju
Thank you for the detailed answer. We do customize it for each customer
(almost a requirement of "enterprise" software), but we have hedged our bets
by making it very easy to customize.

We have our bank do our payroll and pay them for it, but I will have the new
accountant take a special look at these. We are not in NYC! Love NYC but thank
$deity, the rent is insane and it's SO COLD.

Scanning the receipts makes a lot more sense, but it is (was) just easier to
throw them in a shoe box :)

~~~
camz
Quick note, if you are selling a standard software program and then tailoring
it to an enterprise user, then you'd still be paying sales tax on the
"standard" portion of the code. The customized portion COULD be non-taxable
but it would have to be a substantial change and not something minor.

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davidu
Also, you should put more information about who you are and where you are
located on your website. There is zero real contact info.

Customer references are also helpful in services businesses like yours.

~~~
zackattack
ask hn: review my law firm

~~~
Devilboy
Seems fair: Law advice for business critique.

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thetrumanshow
Thanks camz!

I am at the very earliest stage of starting an ad network and will be taking
money from advertisers and redistributing to publishers (after I take my cut).
What are the tax implications here?

If I take a 30% cut and distribute the other 70%, how do I show the gov't that
the 30% is the actual profit and the other 70% is not mine?

What other tax pitfalls can you see?

~~~
camz
There's no real reason for you to stress about this point because if your
taking in 100% of the ad revenue and then remitting 70% of it to your
publishers then you're only keep 30% as gross profit.

Ex: Ad Rev/Sales = $100 Cost of Sales= $70 Gross Profit = $30

So, the IRS is only going to see that you earned the 30% either way. The only
real important issue you may want to consider is whether you want your gross
sales to be so high. Have a large amount of gross sales could exclude you from
a number of small-business tax saving options such as the S-Corp election and
it would make you have to file much more complicated tax returns. If you have
a large amount of sales (millions) then you'd have to file reconciling
schedules between accrual accounting per your books and records to your tax
records.

Honestly, there's an unlimited number of possible problems when you start
making lots of money. Mo money, mo problems. But, lets worry about making that
first buck and take it step by step.

Conclusion, dont worry about it until you get there because you're fine so
far.

~~~
thetrumanshow
Great, but "problems of success" aside, here's another question which is
probably more an international law question but, here goes...

Out of the gate, I am seeing folks from all over the world signup for my ad
network (mainly, US, India, Singapore), and it has me scratching my head. I
don't know how to deal with these customers should they ever convert on a
sale.

Does this affect the way I will pay taxes on the revenue?

Are there countries I should absolutely NEVER try to send money to (for
example, if the country is under embargo)? If for some reason, I can't pay
folks from those places, what becomes of the tax burden? Is the tax liability
for 100% of it on me, or can the money sit forever on hold without being taxed
(presumably until the embargo is lifted)?

~~~
camz
Well income tax wise you'd have to pay taxes on the income regardless of where
it's coming from. If there is a country that is under embargo (which I don't
know haha) then you're keeping all of the income. Thus, you would have to pay
tax on the full amount because you never remitted the portion of the sale that
was supposed to be your cost.

If you pay it out later on, then you could take a deduction for it later. This
is a common issue that people deal with. It's essentially cost of goods sold.
It'll become part of your COGS once you pay it.

------
kitcar
One other question: As a foreign company with a bank account in the United
States (but no operations, although our websites are hosted by an external
company there), is there anything we should be cognizant of? (special US tax
forms or similar we should be filling out, etc...)

~~~
camz
I dont think so, you should be fine since you're earning the income from a
foreign country such as canada. You should be fine since you dont really have
a connection to this country besides your customers.

But, some states might be aggressive and say that your bank account is
"property" that is being held in the state and try taxing you lol. Its funny
because states will try this on occasion.

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cperciva
What are the tax implications if a US corporation grants stock (or options) to
a non-resident alien? (Assume that said alien is not doing any work in the US
and would not otherwise make any filings with the IRS.)

~~~
camz
A US nonresident alien has special rules because your not a citizen. But,
generally a nonresident alien is not required to pay social security on income
in the US if it is related to a foreign nonresident students studies. But if
it's a general part time job or something then you'd have to pay like everyone
else.

Also, you are not taxed on your worldwide income because you'd only be paying
tax on your US income. Thus, you'd only be taxed on income earned in the
united states.

conclusion: options are not taxable if ur an employee because they'd probably
be qualified. Stock grants probably would be taxable since ur getting gross
income in the form of stock or equity.

------
kitcar
If you are a foreign company (Canadian, federally-incorporated), what kind of
actions can you take to make it as easy as possible for a US company to
acquire you (from their accounting perspective) ?

~~~
camz
Canada generally uses GAAP like the US so theres no problem there. Also,
accounting isnt going to be a serious issue when a company wants to buy you.
This is more like an afterthought. If the buyer gets a tax benefit then thats
icing on the cake but the accounting wont make a big difference unless they
see that your books and records are complete shit and totally messed up. Then
the buyer might get scared and think you're cooking the books. But, thats the
only situation i can think of that would make a big deal.

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Encosia
If I go to a coffee shop to do a bit of work on the WiFi, is it legit to buy
the requisite coffee or two on my company card and treat it as a business
expense?

~~~
camz
That's honestly more of a semantics question. The IRS doesn't appreciate it
but, they're not going to kill you for it. Whatever you spend on coffee is
only going to be 50% deductible under meals and entertainment, so don't worry
about it.

------
rdl
Any thoughts on buying my founder shares and cofounders and early team stock
via a rollover as business startup (robs), ideally from a Roth?

And or thoughts on same using small business jobs act of 2010.

Goal is capital gains and amt minimization for scenarios from 10mm exit at
18mo to ipo and billions in 10 years, just to cover possibilities.

The irony is I'd probably donate 90 percent after a certain amount.

~~~
camz
In this situation you're essentially trying to increase your adjusted basis in
the property so that you'd pay less taxes on capital gains and alternative
minimum tax.

Honestly, I can't think of an answer that would solve this problem off the top
of my head right away in the 3mins afters reading your question and here's
why:

Regardless of how you transfer these assets, they're going to be transferred
based upon your current tax basis and your still going to be paying cap gains
every sale.

Ex. You sell for. $100 Basis is for. $50 gain is for. $50

Later through a series of transfers, you regain your shares at the FMV. New
basis is. $100 but you already paid the cap gains tax at every junction so the
whole series of transactions was pointless.

But, I'm sure there has to be a way to get around it and I just haven't
thought of it yet lol. Give me a few hours and I might be able to string
together a plan. I'm going to think this over and see if there's a way over
the day.

~~~
rdl
I do not understand your thinking here.

If it's a ROBS, and you invest using already-taxed Roth IRA/401k funds as a
rollover into a Roth 401k, you actually don't care about the basis. You just
want to characterize it as capital appreciation on an asset acquired in the
Roth.

My understanding is ROBS, aside from being hated by the IRS if they step even
slightly out of compliance with 401k regulations, are basically close to
magic. $50k to set it up, invest $50k in a company to give it $50k
capitalization, and sell the company later for $10b; zero tax owed.

With the SBJA2010, you have a similar deal; as long as the capital gain is due
to the sale of a qualifying asset, you owe no capital gains, and it doesn't
fuck you for AMT either.

~~~
camz
I'm going to have to say that I'm not familiar with ROBs, since I never came
across it. But, its definitely peaked my interest. From the preliminary
reading I've done on it, it's a very aggressive tax planning vehicle and
highly despised by the IRS. Which means it probably is as amazing as you say
it is.

Allow me some time to read up on the case law in regards to this topic and
I'll email you directly if you don't mind. This is something that would
definitely be more than a 30 second answer and I'd definitely be interest in
discussing it merits and shortcomings with you. Thank you for bringing it to
my attention! No matter how many years I deal with taxes there's definitely
going to be a lot that I need to learn lol.

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eduardo_f
Hi Camz, I'm a non-resident alien under a student visa and own a C-Corp in
Illinois. I sell software as a service and would like to know if there is
anything special tax-wise I should take care of being a non-resident alien.
Also, any general strategies on how to minimize my tax exposure as a non-
resident alien?

~~~
camz
Hey eduardo,

We'll first, I would suggest you be very careful when you graduate and attempt
to get a job in the US. Once, you get an H1 visa, its illegal for you to work
for anyone other than the company that applied for your H1

As for non-resident aliens. There's pretty much nothing but bad news there
because you dont get a standard deduction unless your Indian. The only benefit
is if you're working for a company that is related to your education, then you
dont need to pay social security tax.

Other than that, I cant really think of much else you have to watch out for
off the top of me head generally.

~~~
eduardo_f
Thanks! I have graduated already (almost a year ago) and so far so good
working for my own company. We'll see when tax time comes.

------
scottkrager
How do you expense website acquisitions? Five-figure range...my current
accountant is doing them as goodwill over 30 years. Seems nutty to me! I'd
love to expense them as quickly as possible, but only within the law.

~~~
camz
That sounds a bit awkward because goodwill is an intangible that should
amortized over 15 years. I'm going to start showing legal statutes:

"General rule. A taxpayer shall be entitled to an amortization deduction with
respect to any amortizable section 197 intangible. The amount of such
deduction shall be determined by amortizing the adjusted basis (for purposes
of determining gain) of such intangible ratably over the 15-year period
beginning with the month in which such intangible was acquired. "

All intangibles are amortized over a 15 year life. Also, Section 179 is a
deduction that lets you take up to 250k of depreciation in your first year as
long as you meet the rules and dont hit over the phase out beginning at 850k i
think of assets.

BUT, I must remind you that I could be missing something because I dont know
your EXACT tax situation. I'd have to discuss your facts in detail to be
absolutely sure.

But, again the general rule is 15 years.

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vaksel
I feel like many people avoid getting a tax accountant, because they think
it's going to cost an arm and a leg.

So what are the rates usually like? i.e. monthly/yearly service

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camz
Honestly, the cost varies because the quality of the accountant varies. Also,
when you hire a "CPA" most of the time people dont think to ask the CPA what
their background is. CPAs are broken into three types of people. There are tax
guys, auditors, and advisory guys. If you're dealing with a guy that was an
auditor or in advisory, then you're hiring the wrong guy because he doesnt
know his ass from his nose.

This is BY FAR the most common mistake when people hire accountants because
they dont understand the industry.

If you're hiring a "big 4" firm like pwc, kpmg, deloitte or e&y then their
standard hourly rate is 375 per hour for a 1st year associate (fresh college
grad). But, they never get to charge the full standard rate, so the real rate
is probably closer to $250 per hour or (70% to 50% of the standard rate.)
Senior Associates have two years experience cost $450, Mgrs and Sr. Mgrs cost
about 600 and Partners cost about 800 to 900 per hour. All amounts are
standard rates multiply the rate by 50% or 70% to know the effective rates.

For smaller size accounting firms, the price also varies because the
accountant is going to charge based upon their experience and how they
perceive their value.

I won't lie, I charge high rates because I think that I provide more value
than your average tax accountant. A quick story on how I started my firm:

I charged 20 bucks per return during the first month I opened my firm because
I was TERRIFIED and DESPERATE for clients. I got a few because I was so god
damn cheap, but I was killing myself for literally NO MONEY. Obviously, this
wasn't the way to do things. I very quickly learned a few things.

(1) Don't cheat yourself and charge ridiculously low prices because you dont
get more clients. People question your skill and lack respect for you because
you're so cheap. Charging will definitely lend credibility.

(2) You need to take a lot of time to ascertain how much the market is willing
to pay for your services. In my case, I really didnt know how to quantify this
so I just started raising my rates.

The second month I opened my firm, I raised my rates to 150-200 dollars per
return. This was better but still not worth the time. This price point
actually led to MORE clients and MORE sales.

Lastly, the 3rd month I basically started to just play games and REALLY push
the envelope. I wanted to know what the market would accept for my services so
i began to quote $3000 starting price for my services to test the waters. LOL.
Again, my business didn't slow down at all. By now referrals were coming in
left and right to the point where I actually had to SHUT DOWN my website so
that I would stop getting calls.

Recap: $20 to $150 to $3,000 haha.

I generally dont charge hourly because people like certainty, I won't rehash
this discussion because this point has been beaten to death by coders
discussing how they handle consulting jobs. But, I'd say my hourly rate varies
depending on the project. The lowest I'd accept generally would probably be
around $75 dollars an hour? If it was for someone I liked or for a good cause
I've been known to drop the price significantly.

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stevenwei
What state are you in?

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camz
I'm in new york city and that's where I currently practice. I'm working on a
nonprofit 501c3 startup/webtool for education from 1am to 3am. Its nothing as
interesting as the stuff you guys do, but I like technology and really want to
do something that helps people not follow the same roundabout path through
life that wastes time.

