Comment by CRASCH

3 years ago

Any startup that needed a year of runway now needs five years of runway. Runway is money needed before the company can survive off of profits.

If company A has $1M in expenses and $1M in investment, after the tax change it will need ~$5M in investment.

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CRASCH

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erik_seaberg  3 years ago

This makes most salaries nondeductible, so you will need about 25% more revenue (80% of 21% federal and up to 10% state income tax) to break even than otherwise. If you’re pre-revenue your runway doesn’t change.

  • erik_seaberg  3 years ago

    Apparently the right number is 90% of 21+10%, because amortization starts at the midpoint of the first year. (If you take authoritative tax advice from me you will totally go to jail.)