Why the Founder 83b Election is Critical to File on Time if Founder Stock Vests

Описание: Without an 83b election, startup founders (or startup co-founders) have a potential tax liability every time founder shares (stock or LLC units) vests. That can result in a hefty tax bill! The situation arises when founder ownership has some type of vesting, such as a declining buy-back right on the part of the company.

As we've suggested in previous videos, some type of founder vesting (co-founder vesting) of founder stock (or founder units in an LLC) is a good idea if you use equity compensation because it prevents a founder from leaving the company early and keeping a large ownership in the company without having to do the hard work of helping make that ownership valuable.

This video is part of a series on building a startup team.