Anyone here experienced with filling out IRS Form 83b?

[Deucey]

I'm trying to figure out how to determine a valuation when the company doesn't have one yet.

[Via Garibaldi 8]

3 hours ago, Deucey said:

I'm trying to figure out how to determine a valuation when the company doesn't have one yet.

When I was younger, and had a more straight forward tax return, I used to do them myself until I graduated college and started working full time with a 401k, etc. I have been using my family's tax preparer now for years, since I do consult on the side occasionally to ensure that I maximize my deductions, etc.  To answer your question, there's no one set formula for determining a business's value.  I don't know if you prepare your own taxes or use a tax preparer, but if you use a tax preparer, I would ask them if they had any insight.  I figure for what I have to pay to get my taxes done, that's the least he can do for the short period of time that I see him.

[Deucey]

2 hours ago, Via Garibaldi 8 said:

When I was younger, and had a more straight forward tax return, I used to do them myself until I graduated college and started working full time with a 401k, etc. I have been using my family's tax preparer now for years, since I do consult on the side occasionally to ensure that I maximize my deductions, etc.  To answer your question, there's no one set formula for determining a business's value.  I don't know if you prepare your own taxes or use a tax preparer, but if you use a tax preparer, I would ask them if they had any insight.  I figure for what I have to pay to get my taxes done, that's the least he can do for the short period of time that I see him.

My colleagues in this unfunded startup with no assets or revenue did theirs with a per share value of 1¢. I'm worried that'll be a flag at the IRS if the shares ever gain value since it's an assumed value and not substantiated.

So I'm hesitant since I don't wanna be anywhere near a fraud, but I can't see the IRS would accept it if I said it was worthless.

[Via Garibaldi 8]

6 minutes ago, Deucey said:

My colleagues in this unfunded startup with no assets or revenue did theirs with a per share value of 1¢. I'm worried that'll be a flag at the IRS if the shares ever gain value since it's an assumed value and not substantiated.

So I'm hesitant since I don't wanna be anywhere near a fraud, but I can't see the IRS would accept it if I said it was worthless.

So who in the hell are the investors, and where did the liquidity come from to start this company if I may ask?  Savings? Loans? Both? I kind of think it's nuts to invest in a start up with no revenue or assets, especially when you consider how long it takes most companies to get into the black and actually start making money. I hope they have a solid business plan, especially in this environment.  I mean a large number of businesses go under simply because of poor business plans or a lack of funds, or both.

In any event, given how stretched the IRS is, they tend to target the big fish when trying to see if someone cheated on their taxes, but I can understand you not wanting to raise any red flags.

Edited November 9, 2020 by Via Garibaldi 8

[Deucey]

2 hours ago, Via Garibaldi 8 said:

So who in the hell are the investors, and where did the liquidity come from to start this company if I may ask?  Savings? Loans? Both? I kind of think it's nuts to invest in a start up with no revenue or assets, especially when you consider how long it takes most companies to get into the black and actually start making money. I hope they have a solid business plan, especially in this environment.  I mean a large number of businesses go under simply because of poor business plans or a lack of funds, or both.

In any event, given how stretched the IRS is, they tend to target the big fish when trying to see if someone cheated on their taxes, but I can understand you not wanting to raise any red flags.

So I took it bc it'd be the 3rd insurance startup - the other two I did them very well getting started (the first one's already advertising on TV, profitable, and probably gonna IPO soon). So I was sought.

The BP could work, but the most recent convo about "yeah these are the laws - trust me I've done this enough so what you feel matters less than how much in fines do you wanna pay" and the reality of the founder now vs how the founder was talked up and how close to launch this thing was hasn't reconciled.

And they're hoping to get an angel or seed in Q1 once I/we prove this concept can work.

It's got me regretting not starting my own instead of joining - since I know my idea fares a stronger chance if I could get traction (especially with the demo I'd be targeting).

But I signed the forms...

[Via Garibaldi 8]

1 hour ago, Deucey said:

So I took it bc it'd be the 3rd insurance startup - the other two I did them very well getting started (the first one's already advertising on TV, profitable, and probably gonna IPO soon). So I was sought.

The BP could work, but the most recent convo about "yeah these are the laws - trust me I've done this enough so what you feel matters less than how much in fines do you wanna pay" and the reality of the founder now vs how the founder was talked up and how close to launch this thing was hasn't reconciled.

And they're hoping to get an angel or seed in Q1 once I/we prove this concept can work.

It's got me regretting not starting my own instead of joining - since I know my idea fares a stronger chance if I could get traction (especially with the demo I'd be targeting).

But I signed the forms...

That's interesting about that startup going public. Yeah, you could make a killing if it takes off. Still can do ok as an investor too though. Seems like this would be the time to be looking at start-ups given how some things are shaping up. 

Edited November 10, 2020 by Via Garibaldi 8

[NoHacksJustKhaks]

4 hours ago, Via Garibaldi 8 said:

I mean a large number of businesses go under simply because of poor business plans or a lack of funds, or both.

The vast majority of businesses go out under those two situations, especially the first one, bad planning kills a surprising number of them even if they have extensive funding.

4 hours ago, Deucey said:

So I'm hesitant since I don't wanna be anywhere near a fraud, but I can't see the IRS would accept it if I said it was worthless.

I'm a novice here, I know almost nothing about filing the IRS at this stage (considering most of my income is low and filed on my parents account), but Garibaldi's advice seems good to me. Definitely ask a preparer if you have one. I'm not sure if the IRS lets you put no revenue or assets as an option, but that seems like the safest bet to me if you are truly worried, and there is no money behind the place.

And yeah, I don't get good vibes from that startup you're at either, everything said makes it seem shaky at best to me... 

 

Edited November 10, 2020 by NoHacksJustKhaks

[Deucey]

1 hour ago, Via Garibaldi 8 said:

That's interesting about that startup going public. Yeah, you could make a killing if it takes off. Still can do ok as an investor too though. Seems like this would be the time to be looking at start-ups given how some things are shaping up. 

This is #5 of 6 startups in my career. I jumped to real estate to get away from them, but I keep getting pulled back in.

If I could bring myself to do the business suit life, I would. I actually hate the burnout and low pay relative to what I'd get doing the same mgmt roles at an ongoing concern.

That's why I'm hesitant to start my own. I get tired quickly - especially when for the first year or two it'll be just me proving the concept and paying a Dev to make my site til I could pay programmers.

[Via Garibaldi 8]

8 hours ago, Deucey said:

This is #5 of 6 startups in my career. I jumped to real estate to get away from them, but I keep getting pulled back in.

If I could bring myself to do the business suit life, I would. I actually hate the burnout and low pay relative to what I'd get doing the same mgmt roles at an ongoing concern.

That's why I'm hesitant to start my own. I get tired quickly - especially when for the first year or two it'll be just me proving the concept and paying a Dev to make my site til I could pay programmers.

Well yeah it's always a grind keeping a business going. I don't run an entire business, but I have been managing a department for years, one that was failing when I was hired to turn it around, and every year is a constant grind. I had about six months when I came in to study the issues, and then turned it around a year later. Last year was the best year I've had in terms of the amount of money I generated for the department, and this year has been the worst, and that's including the 2008 recession. Part of the challenge with any business is studying trends and understanding where your business is. It's constantly evolving, and you have to find ways to remain relevant. The challenge this year has been moving in-face meetings virtually, which has taken months to organize and there are still kinks. Ensuring we have a platform that doesn't crash and can handle everything we would normally do in person. It's been an uphill battle, and now I would say six months later, things appear to be finally improving little by little.

We have done a few things to keep afloat though. First and foremost, we have enough cash flow and cut some expenses like rent - moved some operations out of the office entirely and downsized our space, so we cut our rent by half or so, so that helps not having to pay $250,000+ in rent annually.

Mentally though, I have become a lot calmer over the years of doing this. I used to stress out more, but less so these days.

Edited November 10, 2020 by Via Garibaldi 8