As you are probably well aware by now, Congress passed a federal crowdfunding law. This was really exciting, but the federal law is problematic for many, many reasons. What are the problems with the federal crowdfunding law? To name just a few: Continue reading →
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An introduction to the federal income tax issues associated with conversion features.
By Dan Wright
Many start-up companies use convertible debt as a way to attract short-term investment. Convertible debt has appeal to investors because it can provide enhanced risk protection, while at the same time allowing for participation in the appreciation of the company as the value of the stock increases. It has appeal for start-up ventures because the cost of issuing convertible debt may be lower, and it can result in access to funding in a shorter time frame than issuing an additional round of equity.
Very seldom in our lives do we need to make 4,000 decisions in rapid succession. Welcome to the life of the owner of a startup. As decisions are made, founders often find themselves asking, “Can this seemingly mundane decision later profoundly affect the future growth and survival of my company?”
For the majority of the decisions, the answer would be “no,” particularly when one of the decisions is what you’re going to have for lunch in order to fuel you with the energy to make more decisions. However, there is one major decision that can set the tone, not only for founders and employees, but also those who will invest in the company: the type of entity you form.