SAVE MILLIONS ON TAXES

BY MAKING THIS ONE SMALL CHANGE

The IRS doesn’t want you to know about this program.

QSBS, or Qualified Small Business Stock, is a tax-saving gem hidden within the Internal Revenue Code (IRC). 

It’s designed to incentivize investments in small businesses, providing significant tax benefits to investors and small business owners alike.

Find out how you can avoid paying taxes

Schedule a free consultation today

SAVE MILLIONS ON TAXES

BY MAKING THIS ONE SMALL CHANGE

QSBS, or Qualified Small Business Stock, is a tax-saving gem hidden within the Internal Revenue Code (IRC). 

It’s designed to incentivize investments in small businesses, providing significant tax benefits to investors and small business owners alike.

Find out how you can avoid paying taxes

Schedule a free consultation today

What Is
Qualified Small Business Stock (QSBS)?

The federal government allows individuals to invest in small businesses under Section 1202 of the Internal Revenue Code (IRC). As noted above, a QSB is any active domestic C corporation whose assets don’t go over $50 million on or after the issuance of stock.

Only certain types of companies fall under the category of a QSB. Firms in the technology, retail, wholesale, and manufacturing sectors are eligible as QSBs, while those in the hospitality industry, personal services, the financial sector, farming, and mining are not.1

A qualified small business stock (QSBS) is any stock acquired from a QSB after Aug. 10, 1993. Under Section 1202, the capital gains from qualified small businesses are exempt from federal taxes.

Take Control Of Your Assets
Tax-Free Income

Once the five-year holding period has elapsed, the stock may be sold to any other party.

You’re able to save over 10 million dollars in profit that qualifies under the QSBS Tax Free program. This must be reported on a tax return and there are provisions in both federal and state (depending upon the individual state) tax returns for excluding this income from taxation.

There would be no capital gains tax or ordinary income tax assessed on these profits.

Industries That Benefit

TECH/SOFTWARE

Startups

c-CORPS

venture capital

Tax Planning Can
Save Millions in Taxes

When planned ahead over a five-year period – rather than selling an asset immediately which would subject it to capital gains – tax planning can save someone millions of dollars in taxes.

By far, this is the best procedure for converting existing assets that will be sold at some point in the future, given a five-year sales window, to tax-free profits.

It will also permit during that five-year period that the assets can be invested in say a company that is growing. For example, those profits when transferred into a company may only be valued at $1 million at the time of transfer, but if the company is able to grow the asset value into $10 million over that five-year period, then this whole amount can be sheltered from taxation.

ABOUT
Kenneth Lindow

CPA & Business Advisor

Ken established a CPA practice in 1976 to serve small businesses desiring growth and profits. In the past he has been a CFO for an INC 500 company that grew 1,985% over three years also helping many small business start-ups, organized many business operations. The firm has assisted individuals, business, non- profit organizations, as well as church groups in providing financing for various projects. 

Many firm clients have developed high growth rates when applying strategies developed using sound financial management with focused goal directed management principles.

More Details About QSBS

Ready To Explore Your
Small Business Finances

ESTABLISH A C-CORP.

The business must be structured as a C-Corporation right from the start. This choice has significant tax implications and must be made carefully.

DIRECT STOCK ACQUISITION

To qualify, you must acquire the stock directly from the company, not from secondary markets or other shareholders.

ASSET LIMIT

QSBS is designed to benefit small businesses. The business's total assets must remain below $50 million to qualify.

MINIMUM HOLDING PERIOD

The IRS wants to encourage long-term investment in small businesses. As such, you must hold QSBS for at least five years to fully unlock its tax-saving potential.

Frequently Asked
Questions

Income is taxed at capital gains rates when income does not qualify for QSBS

No Forms other than set-up of corporation, qualifying for QSBS, and having stock issued by the corporation.

Business is defined by the QSBS Checklist. We can help guide you along with this process. Fill out the form above to have Ken personally reach out to you.

Sales proceeds need to be reinvested in another QSBS Business within 60 days of sale from the first QSBS Business.

Maximizing Maximizing

Timeline of Exclusions

The tax benefits of QSBS are not fixed; they depend on when you acquired the stock. Understanding this timeline is crucial.

Real-World Example
Word Count

Etsy, a renowned e-commerce platform, successfully utilized QSBS to offer stock options to its employees.

These employees enjoyed substantial tax savings when the company went public, thanks to QSBS.

Ready To Explore Your
Small Business Finances

QUALIFIED SMALL BUSINESS
STOCK TYPES

IN-KIND PAYMENT

QSBS can be creatively used as in-kind payment for employees and compensation packages.

EMPLOYEE RETENTION

For small businesses, retaining talent is crucial. QSBS can be a powerful incentive to keep employees invested in your business’s success.

Frequently Asked
Questions

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Income is taxed at capital gains rates when income does not qualify for QSBS

No Forms other than set-up of corporation, qualifying for QSBS, and having stock issued by the corporation.

Business is defined by the QSBS Checklist. We can help guide you along with this process. Fill out the form above to have Ken personally reach out to you.

Sales proceeds need to be reinvested in another QSBS Business within 60 days of sale from the first QSBS Business.

Real-World Example
Facebook

To illustrate QSBS in action, let’s look at the tech giant Facebook. In the early days, Facebook offered its employees tax-advantaged stock options, taking advantage of QSBS.

These early employees reaped substantial tax savings on their stock gains when the company went public, thanks to QSBS.

Explore

Your Options

Now that you’ve uncovered the potential of QSBS, it’s time to consider how it could benefit your business or investments.
With careful planning and the proper structure, QSBS can be a game-changer in your financial strategy.

Ready To Explore Your

Small Business Finances

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