Tax time for new C corp with 0 revenue

[rethink88]

We created a c corp with clerky last year but have zero revenue, no employees, but we put money in via safes to pay for contractors and other software expenses.

I believe we are still required to file an 1120, but is there any simple software tool like turbo tax to help us do this?

 

[insureman23]

@rethink88 So to file the minimum $450 tax with Delaware C Corps we paid $1 to Fondo (YC company), you still need to also file federal and local state taxes as well. So if you find a free way to do that please share: I just downloaded the actual forms on my laptop and I’m probably going to mail them in

 

[kelley1]

@insureman23 What did Fonda help with? How did you just pay $1 , the pricing on their website is more than that

 

[613jono]

@rethink88 Yes ! You need to file. use turbo tax business

 

[peachjwp]

@rethink88 Unrelated to taxes but I would look into rescinding those Safes.

Investors would be surprised to see those things in a cap table / data room. Investors own preferred, founders/employees own common--it's done that way in 100 out of 100 venture-backed startups.

Source: venture attorney & angel investor

 

[miho]

@peachjwp As a former Biglaw startup and venture attorney, don’t listen to this guy. If investors have a problem with this, which they likely will not, then they will tell you when you raise and you deal with it then. I have come across exactly this scenario a number of times and investors didn’t care.

 

[cewilder]

@miho I disagree.

I rep fund-side and I’ve asked to cancel these in the handful of times I’ve seen them. My clients did think this reflected some lack of sophistication (whether I think that’s true is irrelevant). But I’ll add a couple reasons on the legal side to argue against this:
1. It’s not fair to dilute any subsequent cofounders or employee-option holders even more when the safes convert in the first equity round
2. You’d blow the ability to issue any additional early RSPAs at par value going forward and possible 409A underpayment exposure to option grantees. Unless OP feels like forking over a couple thousand to Carta to get an official valuation.

 

[rethink88]

@peachjwp Ok, thanks. What is the best way then for founders to put money in?

 

[batcat]

@rethink88 Normally you just issue stock to the founders and you pay for the stock with the cash you put in with an RSPA. That’s what I did for my C Corp (also using Clerky). This also sets a basis for your price per share for future investors!

 

[veronicaplr]

@rethink88 I am also in a similar situation. When is the deadline for this?

 

[victor3]

@rethink88 You can use zinance

 

[rethink88]

@victor3 Ok, didn’t know about it. In the meantime I hired someone on upwork to prepare the 1120 and file for $200.

 

[lindalmusic]

@rethink88 Can you link or DM who you used?

 

[amanda88]

@rethink88 Yes, can you please share who you used? And is all they did file the 1120?