Hey there! Welcome to the Carry Letter 👋 We’ll be exploring the latest financial news and discussing how it affects entrepreneurs like you. Plus, we'll share some awesome wealth creation insights from successful entrepreneurs.

Let’s dive in! 🏊‍♂️

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Let’s start with the unsexy truth: If you’re spending more time managing your personal finances than your business…you’re doing it wrong.

Startups are a binary game. You either win big or walk away with war stories. So your focus should stay on making something people want, talking to customers, shipping product, driving revenue.

But that doesn’t mean you should ignore your finances. It just means getting the right systems in place early. Set the right foundation so you can get back to building.

Here’s how to avoid costly mistakes, protect your upside, and set yourself (and your team) up to win if things go right.

1. Spend Less Time on Personal Finance

It may sound surprising coming from us, but most founders shouldn’t be spending hours optimizing their personal finances. Why?

Because if your startup works, it’ll likely be the single biggest driver of your long-term wealth. If it doesn’t, no amount of budgeting or tax tweaking will make up for that.

Focus on what matters most in the early days: building something people want. We’ll help you get the financial foundations in place, so you’re ready when things take off.

2. Set Up the Right Structure Early

A few smart moves up front can save you time, stress, and money down the road:

• Incorporate as a Delaware C-Corp

• Buy your founder shares (yes, you actually pay for them!)

• File an 83(b) election within 30 days

• Keep your cap table clean and your documentation clear

These steps are simple, but skipping or misfiling even one can cost you tens or hundreds of thousands later on.

3. Understand How Equity Works

A quick formula to remember:

Company Value = Share Price × Number of Shares

This holds true whether your company is worth $100 or $100M.

When you raise money, investors usually don’t buy your shares, they get newly created ones. That dilutes your ownership, but if things go well, it also grows the pie.

Founders typically hold common stock, while investors get preferred stock with protections like liquidation preferences. Understanding the difference early helps you make better decisions later.

4. Keep an Eye on Your 409A Valuation

After you raise capital, you’ll need a 409A valuation: an independent estimate of your common share price.

While your investors might pay $1/share (preferred), your 409A might be closer to $0.10/share. This lower price is what employees use when exercising options, so keeping it down helps make equity more attractive.

Pro tip: You can negotiate your 409A. It’s worth doing.

5. Don’t Miss the 83(b)

If there’s one step founders accidentally skip - this is it.

An 83(b) tells the IRS you want to pay taxes on your founder shares now (while they’re essentially worthless), instead of later (when they may be worth a lot more).

If you don’t file it in time, you could owe significant taxes each year your shares vest. Even worse? You might owe taxes on income you haven’t even received.

It’s an easy fix, just make sure it’s mailed in within 30 days of your stock grant.

6. Learn the Basics of QSBS (You’ll Be Glad You Did)

Qualified Small Business Stock (QSBS) is one of the most generous tax breaks available to startup founders.

If you hold your shares for 5+ years, you could potentially pay zero federal taxes on the first $10M in gains when you sell your company.

You read that right zero.

QSBS eligibility depends on a few factors (being a C-Corp, staying under $50M in assets, and operating a “qualified” business), but most early-stage companies qualify by default. Just don’t accidentally disqualify yourself through share buybacks or structural changes.

And remember: the $10M exemption is per shareholder which means your early team and investors can benefit, too.

7. Help Your Team Share in the Upside

When you hire, equity is a powerful incentive. But don’t just hand out options, educate your team on how their ownership works, how 409A pricing affects them, and what the vesting schedule means in real dollars.

If you can, consider granting restricted stock to early employees (instead of options). It’s more tax-efficient and starts their QSBS clock sooner.

In Summary:

• Don’t let personal finance distract you from building

• Get your structure right early: C-Corp, founder shares, 83(b)

• Understand how dilution, share classes, and valuations work

• Use tools like 409A and QSBS to preserve long-term upside

• Help your team build wealth alongside you

What’s Happening at Carry Lab?

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See the full list of events here. ⏰

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If you want more resources on building wealth as a solopreneur/entrepreneur, check these out:

• The Solo 401k handbook

• The Roth IRA handbook

• The Self-Directed IRA handbook

• The Guide to Paying Less in Taxes

• What is a Solo 401k?

• How to Open a Solo 401k