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Help with mergers & acquisitions, raising capital, creating stock options and other equity plans

Crowdfunding for Non-Profits – Tips for Spreading the Word

Time is money!

There are a handful of common misconceptions in regards to crowdfunding, but none more common that the idea that beginning a crowdfunding campaign somehow opens the monetary flood gates, or that money begins growing on trees all around you. It seems like common sense, but it really happens.

Non-profits are without a doubt the genre of start-ups that tend to utilize crowdfunding campaigns the most often for their endeavors, and just like the standards set for business crowdfunding, non-profits have a set of guidelines and structures that should be followed to ensure success. Read the rest of this entry »

Restricted Stock – What Makes It Different?

Restricted Stock – What Makes It Different?

Restricted stock, not to be confused with restricted stock unit (RSU), is a type of stock that can be issued to any employee of the company. Restricted stock is also referred to as “letter stock” or “section 1244 stock” because of its regulations outlined by the SEC under section 1244 of the Internal Revenue Code. As its name implies, restricted stock has limitations attached to it when it is issued from the employer to the employee. Meaning, the stock is not fully transferable until certain conditions that are required have been met. Read the rest of this entry »

Crowdfunding Campaigns: How to Ensure Success

 

Has crowdfunding satisfied your money hunger?

Crowdfunding campaigns have the potential to give entrepreneurs and business hopefuls a substantial boost into their desired markets. With hundreds of thousands of failed crowdfunding attempts, it is essential to understand the appropriate steps that can make all the difference when it comes to the success of a campaign.

Pick an appropriate launch site: With hundreds of sites claiming to be “just what you need,” picking an online platform is especially important. Be sure to consider what type of venture you are funding and how you hope to discover investors. Read the rest of this entry »

Stock Appreciation Rights – What Are They? Do I Want Them?

 

Are your SAR’S putting money in your pocket?

Employers have various ways of compensating and rewarding their employees and with the presence of employee stock options and all the various forms of equity compensation plans. Understanding all these methods of compensation is important. Stock appreciation rights are some of the most rewarding forms and today we will explain what they are, why you should want them and how they work.

What are they? Stock appreciation rights are an employee incentive granted by a company according to a pre-determined plan. These grants allow employees the chance to receive benefits and a bonus of sorts that is equal to the appreciation or increased value of a stock over a specified amount of time.

Why do I want them? Stock appreciation rights are highly desired due to the fact that unlike employee stock options, no exercise price is to be paid.  At the end of a given period, the dollar amount that makes up the appreciation value will be given to the employee in a lump sum or placed in a retirement fund. Each company’s procedures will vary, so consulting your own plan will give you the best understanding of how stock appreciation rights apply to you and your plan.

How do they work? Stock appreciation rights give employees the benefit of being involved in the company’s stock performance without being financially responsible for the risks. For example, an employer grants one employee 200 stock appreciation rights and over a pre-determined period of time the stock value increases by one hundred dollars per share. A simple equation will give you the total profit made from this increase; total stock appreciation rights multiplied by the increased value will equal the total take away. In this case, 200 x 100 = $20,000 profit that will be given directly to employee.

As you can see, stock appreciation rights can be an effective means of providing employees with bonuses. Each company’s plan will be different and here at Stock Connections we are equipped with tools to maximize your understanding of the plan you have been given and how the stock appreciation rights will be applied to you and your future financial decisions.

Stock Connections specializes in working with San Francisco Bay Area companies that are involved in mergers & acquisitions, are raising capital, or creating stock option or other equity plans. We help start-up, private and public firms become – and remain – SEC-compliant. Stock Connections’ services are designed to help both start-ups and established firms comply with SEC and other regulations in their equity compensation programs. If you or anyone you know is looking to get involved with any of the above, we encourage you to contact us today!

 

Crowdfunding – Top 9 Online Resources Part Two

Can crowdfunding grown your business?

In our last post, we introduced 5 of the top 9 websites that promote and host legitimate online crowdfunding. Today, we will familiarize readers with the remaining four crowdfunding platforms that can help ensure a successful launch.

They are:

5. Kickstarter: This platform is best known for offering crowdfunding opportunities for creative purposes; this includes films, music, art, journalism etc. Kickstarter has also received positive reviews from press outlets like Time, BBC and CNN. The site is very investor friendly and will present investors with both national and local funding opportunities. Read the rest of this entry »

Crowdfunding – Top 9 Online Resources Part One

 

Can you make your money grow?

Crowdfunding is one of the most innovative methods by which entrepreneurs are funding their business ventures, but with hundreds of sites claiming to assist in legitimate online funding, it can be tough to differentiate the real from the risky. In part one of this post we will introduce 5 of 9 websites that have known popularity and proven results.

1. Community Leader: This site is our favorite here at Stock Connections and we highly recommend it to all of our clients. This site features online videos and seminars to help businesses and investors learn more about the practice of crowdfunding. Their CrowdLeader application allows for the highest level of organization with task lists, investor profiles and direct chat features Read the rest of this entry »

Incentive Stock Options: Tax Return Tips and Tricks Part Two

Are you subject to AMT?

In our last blog post, we introduced basic tips for regular reporting procedures in relation to incentive stock options. In this blog post, we will delve deeper into the issue with an introduction to alternative minimum tax and relevant reporting standards. Let’s start by understanding the basics of the alternative minimum tax and who it applies to.

What is it? Alternative minimum tax is a system of taxation within the American tax system that was originally designed to keep the loop holes used by wealthy tax payers closed. These days, the alternative minimum tax expands taxable income and disallows common deductions within the middle class. Read the rest of this entry »

Incentive Stock Options: Tax Return Tips and Tricks Part One

 

Are your options fencing you in?

Tax season is upon us and with the variety of stock options being so plentiful, it is important to understand how to go about filing a tax return that fits the parameters of your stock option type. Today, we focus on incentive stock options and learn how to report all necessary tax information.

Incentive Stock Options: Grant – Keep in mind that if you have been granted incentive stock options but have not exercised the options, that there is nothing to report on a tax return and you have no obligation to report any data to the IRS in this way.

Incentive Stock Options: Exercise – If you exercise your incentive stock options and are not affected by the alternative minimum tax, then your requirements will remain unchanged. Additionally, an individual company will report all incentive stock options that are exercised in the past year on IRS form 3921 in the New Year.

Incentive Stock Options: Sale – Taxes on an incentive stock options sale, gift or transfer will be determined by holding periods or disqualifying dispositions. If you sold your shares after a predetermined holding period was fulfilled you can report your sale as though all transactions were conducted in the open market. Any capital gains and/or losses will be determined by calculating the difference between your exercise and sale prices. Keep in mind that any long term gains (held for 12 months or more) will be taxed 15%. A disqualifying disposition occurs if you get rid of your incentive stock option shares before fulfilling the incentive stock option holding period. There are ways to report this instance if you gifted, sold or transferred your incentive stock options to an individual that is not a direct relative. Please see below.

  • Did you make money? Were your shares sold at a rate higher than the original purchase price and the value of the shares at the time you exercised them? If you answered yes, then you must determine your income from that sale and report it as compensation income. Anything additional is considered a capital gain and must be reported as such.
  • Did you break even? If you sold your incentive stock option shares for more than you originally paid but for less than the value of the share at the time you exercised your options, then consider all profit to be compensation income and report that number and the sale on your 8949 tax form.
  • Did you lose money? If you lost money in the sale of your incentive stock option shares, report all losses as capital loss on the appropriate forms.

In our next blog post, we will continue our series on tax return tips and tricks by introducing alternative minimum taxes and how to properly calculate and report a qualifying tax rate.  Be sure to check back and let us know if we have helped you understand your incentive stock options and their associated reporting requirements.

Stock Connections specializes in working with San Francisco Bay Area companies that are involved in mergers & acquisitions, are raising capital, or creating stock option or other equity plans. We help start-up, private and public firms become – and remain – SEC-compliant. Stock Connections’ services are designed to help both start-ups and established firms comply with SEC and other regulations in their equity compensation programs. If you or anyone you know is looking to get involved with any of the above, we encourage you to contact us today!

Photo Credit: Tax Credits

Employee Stock Purchase Plans – Understanding the Essentials Part 2

Photo Credit: Borman818

In our last blog post we introduced two of the four essentials that anyone with employee stock purchase plans should be aware of. In this post we will get acquainted with the remaining two essentials and introduce new details for understanding your employee stock purchase plans.

They remaining two essentials are:

3. Be aware of life changes and their impacts: There are countless occurrences that could impact the existence of employee stock purchase plans. Being aware of your own plan inside and out will help ensure that you are prepared for changes as they come down the line. These job or life changes can include anything from termination, resignation, mergers and acquisitions or even death and divorce. Prepare yourself with a wealth of knowledge in relation to your employee stock purchase plans and seek professional advice if necessary.

4. Know your holding periods: If a change in employee stock purchase plans occurs before the appropriate timeline is fulfilled it can result in what is called a disqualifying disposition. This happens if any kind of transfer happens before satisfying your employee stock purchase plan holding periods. While they do differ from plan to plan, it is common for holding periods to be 2 years after employee stock purchase plans are granted, and 1 year after actual purchase. Keep this timeline in mind as there are various penalties that could come with a disqualifying disposition including removal from eligibility for favorable tax treatments.

Stock Connections specializes in working with San Francisco Bay Area companies that are involved in mergers & acquisitions, are raising capital, or creating stock option or other equity plans. We help start-up, private and public firms become – and remain – SEC-compliant. Stock Connections’ services are designed to help both start-ups and established firms comply with SEC and other regulations in their equity compensation programs. If you or anyone you know is looking to get involved with any of the above, we encourage you to contact us today!

Employee Stock Purchase Plans – Understanding the Essentials Part 1

 

Photo Credit: AMagill

Employee stock purchase plans can hold immense financial purpose and benefit. Understanding the procedures and processes to properly capitalize upon the benefits of employee stock purchase plans is especially important.

This two part blog series will introduce four of the essentials for understanding employee stock purchase plans and will help better your financial experience. They first two essentials are:

  1. Know how to enroll and follow procedures: Employee stock purchase plans have very detailed rules for enrollment and they will differ with every company. Be sure to understand the procedures, forms and eligibility rules before enrolling in your own plan. Be conscious of what you are authorizing by signing these forms and enrolling into your plan. We also suggest being aware of enrollment dates with an understanding of an “election period” and “open enrollment.”
  1. Understand tax qualifications: There are multiple types of employee stock purchase plans and being mindful of both tax and non-tax qualified plans will help you understand your own employee stock purchase plan better. Having this understanding will also aid in the future filings of tax returns. Do your research and be proactive about educating yourself on all aspects of your plan and how your financial decisions can affect your taxations and general outcomes. Seek professional advice if necessary.

Stock Connections specializes in working with San Francisco Bay Area companies that are involved in mergers & acquisitions, are raising capital, or creating stock option or other equity plans. We help start-up, private and public firms become – and remain – SEC-compliant. Stock Connections’ services are designed to help both start-ups and established firms comply with SEC and other regulations in their equity compensation programs. If you or anyone you know is looking to get involved with any of the above, we encourage you to contact us today!

Stock Options: 10 Rules for Effective Planning – Part 2

Photo Credit: Helico

Last week we introduced five of the top ten rules that every individual with stock options should be aware of when making their financial plans. This week we explore the remaining five rules.

They are:

Rule 6 – Know your tax bracket and watch for changes:  The six tax brackets are determined by multiple factors including your income and marginal tax rates. Be sure to find your tax bracket and understand your tax rates as well as any potential changes that could happen throughout the year. Read the rest of this entry »

Stock Options – 10 Rules for Effective Planning

Photo Credit: (vincent desjard)

Working in a job that offers stock options does not always mean that you work in the financial industry and understand those options. As you can imagine this can sometimes make managing stock options a highly complex and intimidating endeavor.

In this post we will introduce five of the ten rules that will help anyone grab hold of various simple strategies that could help you plan for the effective future of your stock options.

1. Set obtainable targets and goals: Stock options have been used as talent incentives for years and they should be treated with the value that they possess. Set goals for yourself and your stock options and then determine what you want to gain from a future sale of stock. These goals can be as simple as take my wife on vacation or buy my son a car etc. Read the rest of this entry »

Retirement Planning – How Will Tax Rates Affect My Plan?

Photo Credit: Images_of_money

Retirement is something everyone in the workforce eventually hopes or plans for, but with definite changes to our tax system and new tax rates coming down the line, it is more important than ever to understand how the effects of these landscape changes could impact your investments and plans for the future.

There are six tax brackets in the U.S tax system and they are divided according to marginal tax rate and annual income.  Each of these six brackets and their tax rates will be affected by changes in 2013. Read the rest of this entry »

Strategy for Employee Stock Purchase Plans in 2012

We recently explained that the Bush tax cuts will be ending at the end of this year. With the expiration of these rates approaching so quickly upon us, changes in future taxation has led us to urge those with employee stock purchase plans to take great care in creating a year-end strategy for moving forward in the New Year.

There are various aspects to take into consideration when planning for the future of your employee stock purchase plans. Please keep in mind, however, that an increase in tax rates should not be the only reason to plan for a sale of stocks. The following are a few of the factors to consider when devising strategy for your employee stock purchase plans: Read the rest of this entry »

Startup Questions: Cash or Equity Compensation?

Photo Credit: seekingthomas

A common question for startup companies is how much equity compensation, or shares of the business, they offer employees as part of their income. This can be an especially difficult question when the startup is new and the shares don’t hold much value yet.

What exactly is equity compensation? Because new companies don’t often have the financial means to attract high quality employees, many use this non-cash compensation as a way to give workers a form of ownership in the startup. Equity compensation refers specifically to stock options that include the right to purchase shares at a predetermined price, or exercise price. Over time, the option vests so the employee has the right to sell or transfer the shares, encouraging them to stay with the startup for a longer period of time.

It’s important to note that employees with equity compensation options are not considered stockholders so they don’t have the same right as shareholders. Equity compensation requires a lot of legal, accounting and tax planning, so it’s important for the startup and employees to look into the rules that apply to their situation.

How much should you offer in equity compensation? A Smart Bear explains that when someone works for less salary than they could make somewhere else, they’re making a cash investment into your company. How do you compensate through shares? Think about how much cash they’re giving up by working for the startup. Then make an educated guess as to how much the company could be worth in three or five years. Once you have those two numbers, you can determine what percentage of the company’s shares would be fair by dividing the cash the employee is giving up by the total amount you expect the startup to be worth in three or five years. Although it’s not an exact science, it will give you a good idea of a reasonable offer to make your employee. Read the rest of this entry »

5 Tax Return Mistakes to Avoid in 2012 – Part 2

 

Photo Credit: Images_of_Money

Many questions may arise when filing your taxes. In the previous part of this blog series we discussed three commonly made tax return mistakes. In this part, we’ll outline two more mistakes and what you can do to avoid them. Read the rest of this entry »

5 Tax Return Mistakes to Avoid in 2012 – Part 1

photo credit: x_JamesMorris

The 2012 tax season has the potential to be more confusing than most, especially if you sold any stock last year. Even if you hire a tax specialist to handle your tax return, you can benefit from knowing some of the basic income tax reporting mistakes to avoid. In this blog post, we’ll outline three common tax return mistakes you should stay away from. Read the rest of this entry »

Stock Options – How to Avoid Common Mistakes

 

Photo Credit: Tax Credits

Stock options have the potential to show great reward and gain for employees who value them and are responsible with their grants. The end result of your stock option experience is directly dependent upon the amount of attention that is shown to the relevant details. Keep in mind that changes in the environment and in the climate can affect the value of your stock options.

There are a series of common occurrences that could impact your stock options. Be sure to educate yourself on these events so you can properly plan for your financial future. Your stock option agreement should have all the necessary information to further prepare yourself for the following situations, should they ever occur.

They are:

Termination: No one enjoys getting the boot at work, but if for some reason your employment is ended, it will be good to know how your personal stock options could be affected. Take this into consideration when questioning your employment.

Disability: Depending on your equity compensation plan and your individual stock options, your grants could be affected if you are unable to work due to injury or disability.

Market changes: A fluctuation in the stock market is to be expected; the value of stock options will commonly increase and decrease according to the market climate and can affect your exercise and sale timing. Your documents will have detailed information on your exercise options.

Divorce: Division of marital assets is not always something you can plan for. However, you can make yourself aware of your choices if the situation ever does occur.

Taxes: As with any equity compensation plan, there are specialized procedures for taxation. Each stock option will have various taxations, and in order to properly plan for any additional taxation or change in taxes, employees must be aware of the rules and standards set in place in relation to their equity compensations.

Change of control: Any shift of power, whether it be a merger or an acquisition can greatly affect a stock option plan and an employee’s options for exercise etc. Being familiar with the plan will prepare a stockholder for any change that may alter their options and will explain what they are able to do with their shares during a shift in power.

Here at Stock Connections, we specialize in equity compensation plans.  If you have any questions, we can help. Give us a call!

Stock Connections specializes in working with San Francisco Bay Area companies that are involved in mergers & acquisitions, are raising capital, or creating stock option or other equity plans. We help start-up, private and public firms become – and remain – SEC-compliant. Stock Connections’ services are designed to help both start-ups and established firms comply with SEC and other regulations in their equity compensation programs. If you or anyone you know is looking to get involved with any of the above, we encourage you to contact us today!

 

Crowdfunding for a Cause

Photo Credit: Alex E. Proimos

Within the last few years, crowdfunding sites like Kickstarter have made it possible for young entrepreneurs to gain funding for their dreams. But with crowdfunding becoming an even more popular way to fund endeavors, the concept is shifting through other sectors.

Crowdfunding is now allowing individuals to capitalize and seize the opportunity to gain funding for personal and social causes including medical trust funds. These crowdfunding trends have allowed compassionate individuals the opportunity to directly fund life-changing procedures and plans.

For example, when the most recent Dark Knight film hit theatres, a gunman opened fire on an unsuspecting theatre full of movie goers. Among the injured was Farrah Soudani, a victim whose friends raised funds using the GoFundMe website to cover her medical expenses.

A $2,000 medical trust was set up in Soudani’s name and, thanks to the crowdfunding platform, nearly $7,000 was donated by complete strangers, part of the $170,000 total raised. The beauty of crowdfunding campaigns for a specific cause is in the knowledge of where each dollar of your donation is being spent.

Other medical companies are utilizing new crowdfunding opportunities, including the rare genomics institute and various un-named organizations granting funds to families fighting cancer and terminal illness.

Crowdfunding is a great option to raise funds, but before you or anyone else embarks in this direction, you must understand the legality of the situation and prepare yourself for the rules and regulations. We are here to help you understand your options with crowdfunding and the guidelines you must follow to navigate through these funding procedures. For more information on crowdfunding procedures and the options available, please contact Stock Connections. We are here to help you help your cause.

Stock Connections specializes in working with San Francisco Bay Area companies that are involved in mergers & acquisitions, are raising capital, or creating stock option or other equity plans. We help start-up, private and public firms become – and remain – SEC-compliant. Stock Connections’ services are designed to help both start-ups and established firms comply with SEC and other regulations in their equity compensation programs. If you or anyone you know is looking to get involved with any of the above, we encourage you to contact us today!

 

Increase in Tax Rates – How They Could Affect Stock Compensation

Image Credit: Alan Cleaver

The current tax rates are set to expire at the end of this year, and unless they are extended it could affect your restricted stock/Restricted Stock Units (RSU) vesting, any option exercise or even Employee Stock Purchase Plans (ESPP).  However, it is important to keep in mind that the future possible changes in tax rates are not the only factor that could affect your stock compensation. Even a little increase in your company’s stock price can affect you.  Below are five different tax rates to keep in mind.

  • The Social Security rates could increase. Workers might have to pay 6.2%, up considerably from the current 4.2%. Keep in mind that these taxes apply to the yearly wage cap that is $110,100.
  • Under the new Affordable Health Care Act, Medicare tax rates will rise for high-income payers to 2.35% from the current 1.45%. Also, all capital gains will have a new Medicare surtax of 3.8% upon stock sales.
  • The capital gains rate that applies (currently 15%) could increase to 20%.
  • The dividend tax rate may rise all the way to 43.4% from 15%. This tax rate would apply to any of the dividends you have received on company stock.

Unless you have completely decided and planned on exercising your stock options very soon, increases in tax rates are not the only reason to take action.  You should be planning around your individual situation with taxes. It all depends on what your projections look like for potential increases in the stock price, the possible increase in taxes and how much time you have available to make a decision or exercise your options.

If you need help planning you taxes or have any questions regarding the tax rate and how it will affect your stock compensations give us a call. Stock Connections can help.

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