The US Congress increased software (and other high-skilled) labor taxes over 347%
causing layoffs in larger companies and destroying startups, both bootstrapped and venture-backed. Most people in the industry are completely unaware. We’re spreading the word.
LLCs and S-Corps carry explosive risks from passing through “phantom profit” to the personal taxes of equity-holding employees and shareholders; devastating smaller tech workers.
This results in individual tax bills that are potentially hundreds of thousands of dollars above the individual’s personal income. Founders and employees of these companies are currently faced with declaring bankruptcy, mortgaging their homes, losing healthcare access, selling personal property, and more just to pay their “phantom tax bills” to the IRS for a company they thought shielded them from such liability.
Let’s get you caught up
THIS WEEK IS CRITICAL
The Senate already has a bi-partisan bill signed by the House, but they must ACT THIS WEEK, or more lives will be destroyed.
Here is our goal.
Make sure the Senate fixes this problem THIS WEEK before thousands more startups need to finish filing their taxes and bankrupt their staff.
We cannot let fights over other world issues, even though they are essential, interrupt the timing of this problem. Congress has been aware of this problem since 2018, and it took effect and killed many companies in 2023! We’ve been told for an entire year that a solution is coming.
If we don’t make noise, that solution will never come. If we don’t fix it this week, many more may have their lives destroyed.
Join the new
Small Software Business Alliance
Share this website with your friends and colleagues. Let’s work together to save our industry.
If Congress does not reverse Section 174, you may need to leave the USA if you want to build a company that can:
Add any new features to new or existing software*
Bootstrap or use Angel Capital to build a new company*
Expense the salaries of your Engineering, Software, Design, Patent Lawyer, PhD, R&D, QA, and many other staff in the year you pay them.
Hire outside of the USA for any of these roles
Take risks developing high-uncertainty projects in many high-skill labor industries, not just software.
Hey there, I’m
Ryan Hornberger
Here are my Credentials
Trusting the reporter
You may think this story must be overblown, and I don’t know what I’m talking about. Here’s my credentials:
I did the reading and documented everything.
I’ve spent a significant amount of time of my life reading every IRS memo, every letter of the new law, every letter of the new house bill, and piles of startup stories to build the picture I share with you today. I’ve compiled all this research into an evolving document you can read yourself.
I’m a tech industry veteran who’s worked exclusively in early-stage startups.
I’m the “head nerd” of Whym, an Ex-Snap Engineering Manager (who was there from 100 employees to IPO and beyond) after being acquired by Snap in 2014, and formerly ran billions of dollars of financial transactions for a multi-billion-dollar real-estate software company (after joining it when it was 20 employees). I’ve been acquired once, IPO’d once, raised over 7-million dollars in Venture Capital, and participated in the M&A acquisitions of several companies for Snap. I sit in well board rooms and have hundreds of hours interviewing engineers from juniors to PhDs. I have advised many tech companies. I’m an inventor on several patent applications, including the “Snapchat Snapcode” patent. I have over 16 years of industry professional experience.
All of that said…
I am not an accountant or lawyer; this is not legal advice. This content is purely for reporting purposes only.
Do your own research, but don’t take long. The Senate is meeting this week, and taxes for corporations are due shortly.
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