Topic: Bergen County, NJ

Subject: Warrants and Convertible Notes - Tax/accounting treatment
Gary Lubin
Member: 2016
Posts:3
Submitted on 05-02-16 8:58 pm
Message:

Does anyone have experience with the tax and accounting treatment of Warrants and Convertible Notes to start-ups?  I am trying to understand the best way to structure an agreement to optimize the situation below:


1) A start-up company wants consulting services performed, but does not have much cash.  They are willing to give up equity if they are successful in raising a round of financing.


2) The start-up is willing to issue warrants or convertible notes for future equity.  The future equity could either be granted via a warrant (at a discounted rate from the next funding round) or an amount of equity based on an agreed upon value of the services.


3) Ideally the start-up does not want to have debt on the balance sheet (a concern that it will make them less attractive to a potential investor)... at the same time, the consultants do not want to pay taxes on the services performed.


Any help in trying understanding of the trade-offs of these (or other alternatives) is greatly appreciated.


Thanks,


 


Gary

 
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Replies
Dan Poirier
Member: 2010
Posts: 2

Subject: Re:Warrants and Convertible Notes - Tax/accounting treatment

Submitted on 08-30-16 12:09 pm.
Message:

Gary,


Did you ever get a response to your inquiry on Warrants and Convertible Notes?  I am facing a similar situation and would be interested in any feedback you received.


Thanks,


Dan Poirier


843-276-5300


dan@thepoiriers.net

 
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