Make Time for This Tax Secret
The little-understood 83(b) election can save you a boatload of money—if you do it right.
If you’re a founder or you work in the startup space, you can’t afford to be ignorant about tax law, especially in a down market. One day a piece of paper says you’re worth tens of millions of dollars; the next day, pennies. Many first-time founders saw their valuations drop for the first time in 2022—and with April 18 fast approaching, many are learning of the tax consequences of that for the first time as well.
Of course, you should absolutely rely on the expertise of an accountant. As a founder, more likely than not you barely have enough time in your day to eat, let alone worry about arcane tax code provisions. But there are too many traps for you not to have at least a basic understanding of equity compensation taxation. If you can only make space in your brain for one tax-related thing, make it the crown jewel, one of the most valuable tax strategies out there—the mysterious 83(b) election.