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Avoid These Painful Pitfalls When Launching Your Startup

Thinking of diving into the thrilling world of tech startups? Awesome! But, let's make sure you sidestep some common traps that can turn your journey into a bumpy ride.

Here are five quick tips to keep you on the right track:

1. Incorporate as a C-Corporation

Most successful startups are C-Corps, and guess what? Your future investors will probably insist on it. Plus, being a C-Corp opens the door to the sweetest tax break in the U.S., QSBS. _{(We’ll get into QSBS during our personal finance for startup founders course - keep reading to learn more)}.

Converting later? Painful. So, start right!

2. Purchase Your Shares from the Company

When setting up your C-Corp, make sure to buy your founder shares from the company. It might seem like a small move, but those acquisition details could be your secret weapon in the future!

3. Founder Equity Vesting is a Must

Got a team of founders? Awesome. Make sure each one earns their equity over time. Without clear vesting, you risk a messy cap table if someone decides to take an early exit. That's a headache you want to avoid.

4. Don't Forget the 83b Tax Election

When you secure those founder shares, file an 83b tax election within 30 days. It's like an insurance policy against unexpected tax bills down the road. Ignoring this could mean shelling out big bucks when you least expect it.

5. Keep Business and Personal Expenses Separate

Hate untangling messy finances? Us too. Set up a business bank account pronto. If you're fronting the cash for business expenses, treat it like a loan with a fair interest rate. Pay yourself back when the money rolls in.

What’s Happening at Carry?

Here’s what you can expect in the coming weeks

See the full list of events here. ⏰

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If you want more resources on building wealth as a solopreneur/entrepreneur, check these out:

• The Solo 401k handbook 

• Common Solo 401k FAQ

• What is a Solo 401k?

• How to Open a Solo 401k

• Solo 401k Contribution Calculator