_{The 30-Day Window Every Founder Should Know About}

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You're already thinking about runway - every founder in 2026 is.

Burn rate, cash position, months until your next milestone.

It's the math that matters.

But there's another set of numbers worth paying attention to: the tax decisions that can add months (or years) to your runway without raising another dollar.

Take QSBS. If you structure it correctly from incorporation, you can exclude 100% of capital gains on up to $15 million per founder after holding for 5 years.

...that's not a loophole - it's policy designed specifically for startup founders. But only if you set it up right from day one.

Or R&D credits: most early-stage startups qualify and don't realize it. (These can offset up to $500K in payroll taxes, putting real cash back in your account this quarter)

Section 174 was just reversed, so you can now deduct domestic R&D expenses immediately instead of spreading them over five years.

2026 brought real changes. New QSBS thresholds (100% exclusion vs. the old 50%). Immediate R&D deductions.

But also new restrictions - team meals went from 50% deductible to 0% under the TCJA sunset.

The founders who understand these mechanics early? They just have more options. More runway. More flexibility when it counts.

This post covers what actually matters for venture-backed C Corps - from 83(b) elections (you have 30 days from stock issuance) to compliance deadlines, accountable plans to educational benefits.

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1. Incorporation & Equity Basics

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• Form a Delaware C Corporation: Standard for venture-backed startups. Delaware law and courts are investor-friendly.
• Issue Founder Stock & File 83(b) Election:
  
  • File within 30 days of stock issuance.
  • Locks in capital-gains treatment and avoids ordinary income tax on vesting shares.
  • Missed filings can cost hundreds of thousands later.
• QSBS Eligibility (IRC §1202):
  
  • Stock must be originally issued by a domestic C Corporation (received directly from the issuance, options, or in exchange for services), not purchased second-hand.
  • Aggregate Gross Assets threshold at issuance increased from $50 million to $75 million, indexed for inflation starting 2027.
  • Holding period & gain exclusion % (for QSBS acquired post-July 4, 2025):
    
    • Held ≥ 3 years → 50% exclusion of gain.
    • Held ≥ 4 years → 75% exclusion. 
    • Held ≥ 5 years → 100% exclusion (full benefit).
  • Increased gain exclusion cap per issuer: for post-July 4, 2025 stock, the cap is $15 million (or the alternative rule of 10× basis, whichever is greater).
  • Maintain good records: incorporation date, stock issuance dates, shareholder list, capitalization, proof of active business operations (active trade/business requirement), and documentation of basis, etc.
• Cap Table & Option Pool:
  
  • Use Carta, Pulley, or Captable.io from day one.
  • Reserve an option pool before outside funding to reduce later dilution.
• Bylaws, Stock Purchase Agreements, IP Assignments:
  
  • Store permanently in corporate records.
  • Make sure all IP created by founders is assigned to the company.

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2. Banking, Accounting & Cash

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• Open a separate corporate bank account—never mix personal and business funds.
• Set up cloud accounting (QuickBooks Online or Xero) or a bookkeeping service (Pilot, Bench).
• Choose an expense management platform (Ramp, Brex, Mercury) for receipt capture and spend controls.
• Build a basic runway forecast: monthly burn rate, cash on hand, and months of runway.

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3. Payroll & Compliance

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• Obtain an EIN (IRS.gov, free).
• Register for state payroll IDs, unemployment, and workers’ comp where you have employees or nexus.
• Use Gusto, Rippling, or Justworks to manage W-2 payroll, tax withholding, and filings.
• Implement standard vesting (4 years with 1-year cliff) for all founders and employees.

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4. Meals & Entertainment (TCJA Sunset – Jan 1, 2026)

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• Changing: Employer-provided meals (team lunches, late-night pizza, snacks) and on-site cafeterias go from 50% deductible → 0%.
• Still Deductible (50%):
  
  • Client or Partner Meals: You’re present, not lavish, business discussion documented (receipt, date, attendees, topic).
  • Travel Meals: Dinner while pitching investors or at a conference—record trip purpose/location.
  • Offsite Business Meetings: Lunch with co-founder to strategize roadmap.
• Entertainment: Sporting events and concerts not deductible, except holiday parties or all-staff events, which remain 100% deductible if primarily for employees.

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5. Travel & Transportation

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• 100% Deductible: Airfare, hotels, Uber/Lyft/taxis, trains, parking, tolls—if bona fide business travel.
  Not Deductible: Commuting from home to your regular office. Use accountable plans for mileage reimbursement where appropriate.

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6.  Rent & Workspace

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• Office Rent: Fully deductible as a business expense.
• Home Use: 
  
  • Founders cannot simply run personal rent through the company. Doing so without proper structure risks commingling personal and business expenses, which can jeopardize liability protection and create messy tax issues.
  • If you’re an employee of the C Corp, reimburse a fair business-use percentage through an accountable plan (requires substantiation and returning excess reimbursements).
  • If you’re a contractor, you may claim a home-office deduction on your personal tax return for the business-use portion of your home.
  • Fringe benefits are not the same as an accountable plan:
    
    • If rent reimbursements or housing allowances are treated as a fringe benefit rather than under an accountable plan, they generally become taxable compensation to the employee or founder and subject to payroll taxes.
    • Always document the business purpose and structure to avoid accidental taxable income or piercing the corporate veil.
      
      

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7. Accountable Plans (Highly Recommended)

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• Reimburse founders/employees for legitimate business expenses without adding to taxable income.
• Requirements:
  
  • Expenses have a business connection.
  • Receipts/records submitted promptly.
  • Excess reimbursements returned.
• Examples: Mileage to an offsite meeting, software purchases, travel expenses.

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8. Education & Coaching Benefits (IRC §127)

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• Provide up to $5,250 per employee, per year tax-free for education or coaching.
• Must have a written educational assistance plan.
• Cannot favor highly compensated employees.
• Payments over $5,250 become taxable income.
• Examples: Coding bootcamp for an engineer, leadership coaching for a manager.

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9. Holiday Parties & Team Events

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• 100% deductible if primarily for employees (annual holiday party, summer picnic).
• Invite all staff, not just executives, to avoid reclassification as compensation.

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10. Recordkeeping & Receipts

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• Receipt Threshold: Required for expenses ≥ $75 (and all lodging, regardless of amount).
• Under $75: Still record amount, date, vendor, and business purpose.
• Retention: Keep documentation for ≥ 3 years after filing returns (longer for loss carryforwards or underreported income).
• Use tools (Ramp, Brex, Fyle, Shoeboxed) or card memo fields for quick logging.
• Separate meals from entertainment in your books.
• Review categories before year-end to fix misclassifications.

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11. R&D Credits (§41) & §174 Reversal

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• Section 41 R&D Credit: Provides a dollar-for-dollar reduction of income tax (or, for many early-stage startups, can offset up to $500k of payroll taxes if < 5 yrs old and < $5 M gross receipts).
• Section 174 Reversal: Under the OBBBA fix, domestic R&D expenses can again be fully deducted in the year they’re incurred, instead of being amortized over five years. International R&D expenses must still be capitalized and amortized.
• Best Practices:
  
  • Track project names, employees’ time, contractors, prototypes, and supply costs contemporaneously.
  • Maintain narratives explaining how work aimed to resolve technical uncertainty.
  • Coordinate with your CPA or a specialty provider early - credit studies are easiest while records are fresh and provide the greatest benefit when filed on time.
  • For VC-backed C Corps, this can materially extend runway by reducing quarterly estimated taxes or payroll taxes.

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12. Culture & Communication

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• Adopt expense reimbursement and educational assistance policies.
• Share TCJA meal deduction changes early with managers for 2026 budgeting.
• Define communication channels and decision-making norms.
• Maintain secure cloud storage with two-factor authentication for all sensitive documents.

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13. Key Tax Deadlines for Delaware C Corps

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• January 31 – 1099-NEC Due
  
  • Send 1099-NEC forms to contractors and the IRS.
    
    • Threshold: ≥ $600 for 2025 payments; ≥ $2,000 for 2026+
• March 1 – Delaware Franchise Tax
  
  • Corporations: Minimum $450 (can be higher depending on asset value & method used).
• April 15 – Corporate Income Tax (Form 1120)
  
  • File your C Corp return or request an extension (Form 7004).
  • Pay any balance due by this date even if extending.
• Quarterly – Estimated Taxes (Form 1120-W)
  
  • Make payments in April, June, September, and December.
• October 15 – Extended Returns
  
  • File Form 1120 if you extended in April.

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Need help?

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Disclaimer

This blog for informational purposes only and does not constitute legal or tax advice or create an attorney-client relationship. Companies should consult their own attorneys or tax accountants for advice on these issues. Because of the generality of the issues discussed in this piece, the information provided may not apply in all situations and should not be acted upon without specific legal or tax advice based on particular situations.