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The Four Magic Letters of Startup Wealth: QSBS
Carry
October 07, 2024
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The Four Magic Letters of Startup Wealth: QSBS
Picture this: after years of building your startup, someone offers to buy your company for $100 million. A dream come true, right? But without the right tax strategy, a huge chunk of that windfall could vanish into taxes. This is where QSBS (Qualified Small Business Stock) comes in—an often overlooked tax break that could save you millions.
What is QSBS?
QSBS allows startup founders, employees, and investors to avoid paying federal taxes on up to $10 million in capital gains, or 10x their investment, when selling shares. The catch? You need to meet specific criteria and hold your shares for at least five years. For founders, this is the difference between losing millions in taxes or keeping your hard-earned wealth intact.
How Founders Can Benefit?
Take Sarah, a founder who sold her stake in a company for $50 million. Without QSBS, she would’ve paid nearly $8 million in federal taxes. Thanks to QSBS, her entire $10 million in gains was tax-free. By gifting shares to family members, she multiplied that exemption, shielding even more from taxes.
Don’t Miss Out
Most founders overlook QSBS early on, only realizing its value near a liquidity event. The key is to plan ahead. Whether you’re just starting or on the verge of a major exit, understanding QSBS could be the difference between losing millions or keeping it all.
Ready to learn more about this game-changing tax break? Dive deeper into QSBS and other strategies to maximize your finances as a startup founder here.
What’s Happening at Carry?
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See the full list of events here. ⏰
Personal Finance for Startup FoundersEverything you need to know about personal finance as a startup founder. Including: Founder compensation strategies, team and early employee compensation, equity grants, and tax optimization QSBS benefits and planning. Estate planning for startup founders, diversification and retirement accounts for founders, and personal finance advice tailored to founders.
How to Pay Less in Taxes in 2024 (for Business Owners)Unlock key tax strategies tailored to business owners that could save you thousands this tax season.
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