Among the many considerations for entrepreneurs of startup companies, managing tax issues tends to rank near the bottom of the list. Instead, entrepreneurs see more value in spending seed capital and limited resources on growth initiatives, such as courting a customer base and improving product and service lines and distribution.
As these initiatives bear fruit and the company grows, so too does its operational and tax complexity, often before startups have the financial means to adequately manage that complexity. As a result, tax opportunities may be lost and risk created.
Tax issues are best dealt with as a company grows. This approach allows for proactive planning and execution of tax function initiatives including; tax planning, cash flow management, risk management, compliance and reporting, and tax department operations. Yet as each company grapples with the difficulties of moving beyond the startup stage, it may not always be feasible to attack tax issues head-on while so many other high priority items wait in the wings.
TaxOps Investments allow the tax function of a startup to grow in complexity with the company.
TaxOps Investments partners with promising startups to make sure tax issues are dealt with correctly from the start. “This allows the tax function to grow in complexity with the company,” Brian Amann, director at TaxOps, says. TaxOps Investments can enter into these types of equity arrangements since it does not offer the audit and financial statement attestations that require independence under AICPA guidelines.
In exchange for an equity position, TaxOps advisors provide partner companies with the tax expertise and solutions to anticipate and manage ongoing tax issues in the most cost effective manner. “Our equity interest means that we share the risk and take literal ownership of these high-growth startups,” Amann says.
Five years ago, GreenBuilder Media met the short-list of critera for TaxOps Investments; the eco-friendly company was long on promise and short on capital. As its green technique and technology vision rapidly spread out across the U.S., the company’s tax complexity also increased. Complying with onerous rules and tax filings in various jurisdictions carried significant opportunity costs, reducing capital available for growth. Amann says, “The company couldn’t afford to pay for the complexity they had created with their rapid growth.” (See our client profile on GreenBuilder Media)
TaxOps Investments took an equity interest in exchange for three years of specialty tax solutions, enough time and expertise to see GreenBuilder beyond the startup stage to the next level in its development. TaxOps provided much-needed tax solutions to the company and helped position them from a tax planning and cash flow standpoint for future growth.
TaxOps Investments partners with earlier stage companies with complex tax needs that are not being met. “With a little help on the front end, we hope to give these companies the solid footings they need to grow and become successful,” Amann says.
Please contact Brian Amann at 720.227.0062 or bamann@taxops.com if you’d like to discuss an equity arrangement with TaxOps Investments.
