What is Spatial Temporal Analysis: Spatial temporal analysis is a method of analyzing patterns and trends in the geographic distribution of events over time. In the context of civil unrest, this can include the use of social media, police records, and other sources of data to map the locations of protests and other incidents, as well as to identify patterns in their timing and frequency.

Benefits of Using Spatial Temporal Analysis:

1. Real-time Monitoring: One of the key benefits of using spatial temporal analysis is the ability to identify emerging trends in real-time. This allows organizations to quickly respond to potential hotspots of civil unrest.
2. Uncovering Hidden Patterns: Another benefit is the ability to identify patterns and relationships between events that might not be immediately apparent. This information can inform targeted and effective preventative measures.
3. Effective Response: In addition to preventing civil unrest, spatial temporal analysis can also help organizations respond more effectively in the event of a crisis. By providing real-time data and insights, the analysis can inform decision-making and help authorities respond quickly and effectively.

Civil unrest is a complex and challenging issue that requires a multifaceted response. Spatial temporal analysis can be a valuable tool in this effort, providing real-time data and insights into the patterns and trends of events. By using Five23’s spatial temporal analysis, governments and other organizations can better understand the underlying causes of civil unrest and take action to prevent it.

In conclusion, the use of Five23’s spatial temporal analysis is a promising solution for preventing civil unrest. By providing real-time monitoring and uncovering hidden patterns, this tool can help organizations respond more effectively and take preventative measures to avoid civil unrest.

The post How Five23’s Spatial Temporal Analysis Can Help Prevent Civil Unrest first appeared on Five23.

One of the most common forms of equity vesting is the four-year cliff vesting schedule, which requires an individual to work at a company for a certain period of time before they become fully vested in their equity. For example, a founder or employee may be required to work at a company for four years before they become fully vested in their equity. After the four-year period, the individual becomes 100% vested in their equity, meaning they have the right to exercise their stock options or sell their RSUs.

Another common form of equity vesting is the graded vesting schedule, which allows an individual to become partially vested in their equity over time. For example, an employee may be 20% vested after one year, 40% vested after two years, and so on, until they become fully vested after four years. This type of vesting schedule is often used to provide a retention incentive for employees, as it encourages them to stay with the company for a longer period of time in order to fully vest in their equity.

There are also different types of vesting triggers that can be used to determine when an individual becomes fully vested in their equity. For example, a company may use a “time-based” vesting trigger, which means that an individual becomes fully vested in their equity after a certain period of time. Alternatively, a company may use a “performance-based” vesting trigger, which means that an individual becomes fully vested in their equity based on the achievement of certain performance milestones.

It is important to note that equity vesting is typically subject to certain conditions, such as the individual’s continued employment with the company. If an individual leaves the company before they become fully vested in their equity, they may forfeit some or all of their unvested equity. This is known as “repayment” or “clawback” provision.

In summary, equity vesting is an important aspect of startup culture as it aligns the interests of the founder or employee with those of the company and provides a retention incentive for key individuals to stay with the company over the long term. There are several different types of vesting schedules and triggers that can be used, and it is important for founders and employees to understand the terms of their equity vesting in order to make informed decisions about their ownership in the company.

The post Understanding Equity Vesting in Startups first appeared on Five23.

The post Spatial Temporal Data for Crime Analysis: A Comprehensive Look first appeared on Five23.

This is where Five23 comes in. As a leader in the field of spatial temporal investing, Five23 is utilizing advanced technologies like machine learning and big data analytics to analyze patterns and relationships in real-time data. By considering both spatial and temporal factors, Five23 is able to provide a more comprehensive and accurate view of the market, allowing investors to make informed decisions with a level of precision that was previously unimaginable.

But what exactly is spatial temporal investing, and how does it differ from traditional approaches?

Spatial temporal investing involves the analysis of both spatial and temporal data to make investment decisions. Spatial data refers to data that has a specific location, such as the location of a company or the location of a natural disaster. Temporal data, on the other hand, refers to data that has a specific time component, such as the time of day or the time of year. By analyzing both of these types of data together, it’s possible to gain a more complete and accurate understanding of the market and make more informed investment decisions.

One of the key benefits of spatial temporal investing is that it allows for a more comprehensive view of the market. By considering both spatial and temporal data, investors are able to take into account a wider range of variables and factors that can impact the market. For example, a traditional approach might consider the historical performance of a particular company, but a spatial temporal approach could also consider the location of the company and the current economic conditions in that region. This allows for a more nuanced and accurate view of the market, and can lead to better investment decisions.

Five23 is at the forefront of the spatial temporal investing movement, using advanced technologies like machine learning and big data analytics to analyze real-time data and identify patterns and relationships that traditional approaches might miss. By considering both spatial and temporal factors, Five23 is able to provide investors with a more comprehensive and accurate view of the market, allowing them to make informed decisions with confidence.

The potential benefits of spatial temporal investing are vast, and I believe that Five23 is leading the way in shaping the future of investing. If you’re interested in learning more about how Five23 is revolutionizing the world of investing, be sure to check out their website and follow them on LinkedIn for the latest updates.

The post Spatial Temporal Investing at Five23 first appeared on Five23.

Courtney is behind Ideaspired. You can read her blog and tips here: Ideaspired

If your business is in debt, you’re not alone, since 70% of small businesses have debt, according to Federal Reserve Banks. Overwhelming business debt can add to the stress of being a business owner. Taking charge of your debt with smart budgeting and planning can help you improve your financial future.

Evaluate Your Debt

Having a clear understanding of your total business debt helps you create a plan to pay it off faster. Review your outstanding loans, credit cards, bills to vendors, and other debts to get a total. Prioritize the debt and make a plan to pay it off as quickly as possible.

Create a Realistic Budget

Review your current business budget to see where your money is going. You’ll likely need to change certain areas to free up more money to pay debt or reduce your reliance on credit to pay for business expenses.

Cut Expenses

Paying off debt faster and reducing new debt can only happen if you cut your expenses and/or increase your revenue. Look for bigger cuts that give you a large amount quickly. Then, add several smaller cuts that can build up for more savings. Examine every expense to ensure it’s necessary and find places to cut. Ways to cut expenses include getting rid of unused company vehicles, moving to a smaller location, or improving your efficiency.

Boost Revenue

Bringing more money into your business while cutting your expenses gives you a bigger cushion of cash. Offer a special to boost sales, or focus on upselling current customers for larger individual sales. Try new marketing techniques to attract additional customers.

Collect on Debts

If your clients pay through invoices, collect payments faster. For example, if you normally give people 60 days to pay, you might change the payment terms to 30 days. This gets money coming into your business faster, so you can pay off debt and improve your financial situation. Tracking down late payments can also help.

Consolidate Business Debt

Consolidating your debt can make it easier to pay off. With a consolidation loan, you can pay off individual debts and make a single payment each month. An ideal consolidation situation gives you better terms or interest rates than the individual debts.

Negotiate Rates and Terms

An alternative is to negotiate the rates and terms of your current debts. If your lenders lower your interest rate, you can have smaller payments or pay the debt off faster. If you can’t keep up with your current payments, ask your creditors if they’ll extend the length of the loan or accept smaller payments.

Form an LLC

By forming an LLC, you can often lower your taxes, which can improve your financial situation. It also provides protection against personal liability. To form an LLC in Idaho, you need to choose a registered agent, file a certificate of organization, and create an operating agreement. If you don’t want to do the paperwork yourself, you can hire a formation service without the large fees a lawyer charges.

Improve Your Financial Health

By paying down your business debt, you set yourself up for a healthier financial future. If you need help getting an overview of your business, consider the options for startups from Five23.

The post Tackle Business Debt and Improve Your Financial Health first appeared on Five23.

In broad terms, a tech stack is a list of software plus programming languages that operate in the same environment to create websites and mobile apps and maintain their activity via server-side and client-side support. It also includes libraries, frameworks, and databases that will help the teams manage the products at any moment in their lifespan.

When I start working with a new startup, especially in alpha and growth stages, the issue of choosing a good, solid technology that will meet all product objectives will not become obsolete in a couple of years is rising ubiquitously. Over the years, I gathered a brief list of advice that will help entrepreneurs put their money on the right horse.

Talent Pool

With a huge number of these tools available on the market, the stack choice can become quite a debate and should depend on a competent unit in this case. Such a decision should be delegated to an experienced architect and not to the team of developers as the developers may suggest a tech stack that is the most suitable for them instead of the most effective for the project.

But bear in mind that this shouldn’t be taken as the gospel. You should try to find a middle ground based on the time and costs you have — replacing a team member can be costly and time-consuming. Therefore, it’s worth asking team members about which tools they prefer before making the final decision.

Of course, putting a .NET developer into a Java-based stack wouldn’t make sense. But if it were some minor utilities where he/she had no experience, then that won’t be an issue.

The good thing is, dedicated team model allows for adjusting their roster based on your needs and can keep the project relevant at any stage.

The Platform

There are currently 2 major, rival houses: web and mobile. This topic is good for another dozen articles and will probably never be solved; moreover, the first option doesn’t negate the second one as they can coexist within modern-day gadgets.

The only right answer is to know your end-product well. You need to be fully aware of what it stands for and how to make great use of it: does it naturally feel like a neat mobile app that can be used via simple swipes (messengers, authenticators, taxi services, etc.). Or maybe it is a convoluted mess that requires tons of options, data filling, or precise clicks to allow for the best experience (forums, movies platform, torrent tracker, etc.)? If so, then “web” is the clear winner.

Although both of these platforms can coexist, you still get to decide which should be conducted first as it will define which audience will use your product.

As a rule, it’s a safe bet to make a web app first: such solutions are more forgiving towards mistakes thanks to the greater opportunities for the user to avoid a product’s bugs (mouse availability, bigger screen). Furthermore, web-based products aren’t as dependent on the cross-platform availability: they’re usually accessible via numerous browsers. The updates are also much easier to deliver when you have direct access to your app and don’t have to wait for mobile app stores to deploy it for you (at least 2 weeks, as a rule).

Unlike the rivalry between Android and iOS, the web is a safe place for any type of apps to be fully functional. When you opt to go the mobile path, you will have to choose between the native app and its cross-platform option. Although multi-platform apps provide a wider audience grasp and can be tempting, they almost never reach the quality level that native apps bring upon themselves. As a rule, Swift (a common iOS tool) language isn’t the best for Java (a common Android dev tool) developers and vice versa, making backward compatibility a serious challenge.

The choice here is crucial and you should always pick the right path — remember that it’s always cheaper to make the right choice at the very beginning than to modify your product at the later stages when the tech stack has already defined its route.

Type of Project

There are a ton of different tools, and the way your product is supposed to run will be dictated by which tech stack you pick. From a more technological standpoint, there’s a strong dependency towards, for example:

 – Projects that prioritize speed over high traffic loads, which would make the best use of Ruby or Node.js. Both of these technologies grant a sizeable boost thanks to the well-rounded syntax and the overall terse design. Open-source libraries are also what makes it appealing for the developers to choose.

 – Projects with a high emphasis on machine learning and data science, which will be a fine match for Python powered by SciPy, NumPy, or Pandas libraries. Python can give you an edge when dealing with large data clusters thanks to the blistering processing speed.

 – Java, on the other hand, is a universal soldier among the programming languages and can be utilized by almost any type of project. In fact, it is compatible with numerous side-tools or libraries that make it an obvious choice for the vast majority of top companies, especially when they want to develop an Android-app.

 – C/C++ would probably be the go-to choice when crafting complex IoT solutions or even a graphics engine, let alone a full-blown AAA game.

Frameworks

When talking about the frameworks, this is up for debate, depending on how convenient it is for the developers’ team. Depending on each project, it pursues the same goal of aggregating the practices within the project but can be adjusted by the developers. It also helps unite the different components of large projects yet still grant some flexibility by implementing user extensions and modifying its code to a various degree.

The choice usually depends on the compatibility of each element, such as AngularJS, when the project has opted to go for JavaScript. Also, the choice of Zend, Symfony, or Laravel will be a logical step to enhance the development of PHP-based projects; moreover, asp.net MVC or asp.net web API can come in handy when dealing with the .NET tech stack.

Server

The web-server area used to be a battlefield of ideas but is currently a place for two major competitors: Apache and NGINX.

Not only is Apache free, but it’s also easy-to-grasp with the APR function that helps in creating modules. It also has remarkable compatibility and a large source of data knowledge to support its products. SSL and TLS encryption are also at your service to allow for improved security online.

On the contrary, NGINX is a fine option when the performance is set to become a cornerstone for the project. It also requires much less memory and reduces the load when supporting the clients by utilizing a minimum thread or none at all.

This, however, doesn’t mean that both of these options cannot be used: by simply moving NGINX in front of Apache as a reverse proxy, it will help you get the best of two worlds: NGINX for the static content and Apache for the dynamic content to be further returned to the rendered page.

Trends

Despite a hefty variety on the market, we can still see the tendencies for certain tools to be picked over the others when it comes to full-blown successful projects. Judging by the data, top companies lean towards:

    Programming languages: PHP, Python, Java, Go, JS

    Frameworks: Node.js, Angular.js, Django

    Databases: MySQL, PostgreSQL

    Server: NGINX, Apache

    DevOps: Docker, GitHub

    Utilities: Google Analytics

    Business Tools: Slack, Trello

In Conclusion

These general remarks can only touch a fraction of the possible software combinations when forging a system that will run your product. Whether it is .NET, Java, MySQL, or Slack, you should also take into account the size of a future project; sometimes it’s even more important than the actual perks of each of the aforementioned stacks.

Reliability is also a key factor when picking a tech stack. As a rule, the more mature tools prove to be the most consistent in terms of performance and bring a bigger toolkit to make developers’ lives easier and more time-efficient. If an ecosystem has a wide range of continuous integrations and bug-tracking systems, it will be a large performance boost for your developers when crafting your end-product.

It you like to see how Five23 can help your startup and its technology suite. Feel free to contact us here or by email: contact@five23.io.

The post Leveraging Technologies for Startups (2020 Guide) first appeared on Five23.

Courtney is behind Gig Spark, a blog to help people enter the gig economy. Many call gigs the first step to entrepreneurship. You can read here blog and tips here: (http://www.gigspark.biz).

When you’re a sole proprietor and staff member of a new startup, the pressure can build up fast. Finding ways to relieve that pressure and manage your workload is the key to finding long-term success, but how can you do this without hiring full-time staffers? Well, you can start by using these tips to find freelance helpers and tech tools that can boost your business.

You Need to Be Aware of Background Check and Hiring Rules

So first things first, before you begin hiring anyone to help your company grow, you need to know how to do so without becoming entangled in potentially costly legal issues. Let’s begin with background checks, which are a common hiring tool used by entrepreneurs and businesses to ensure employees are trustworthy. During this screening process, you are required by the U.S. FCRA (The Fair Credit Reporting Act) to inform candidates that a background check will be conducted and that the results of that check can impact your decision to confirm their employment. That last part can be critical in some states, where you can only perform background checks after a job offer is made and therefore cannot use the results in your preliminary hiring processes.

You should also know that you can research seven years’ worth of history but you may not legally be able to flag candidates whose record includes arrests that did not result in a conviction. Knowing these complex rules can prevent costly lawsuits, but if you plan on hiring any employees, researching other employment laws (U.S.) can also help.

You Need to Know Where to Look for Quality Freelance Help

Every business needs a website to succeed and HTML code provides the foundation for those websites. Hiring a freelance HTML5 developer who knows the latest HTML iteration and has experience customizing business websites could be a good investment. HTML code allows developers to insert helpful features, like contact forms, data tables and social media links into your site without you ever having to deal with complicated code. With these features in place and coding added correctly, your new website will be more user-friendly and professional, which can help boost your profits and your ROI for any project costs involved.

Not interested in having a custom-built website for your new business? You can use freelance job boards to attract talent for other projects, including marketing consultants, content writers and even virtual assistants. Virtual assistants can be particularly valuable to entrepreneurs who are working alone, since these remote workers can assist with time-consuming tasks, such as managing your calendar, keeping tasks organized, and allowing you to focus on more important aspects of your business.

You Need to Research Tech Tools That Can Grow Your Business 

Working with freelance and remote contract workers is a great way to get the help you need without a lot of added administrative costs. If you are working with an extremely tight business budget though, you may not even have room to hire those freelance or contract employees. In this case, you may need to look for tech that can help solve some of the most pressing issues keeping you from reaching your full potential. For instance, productivity apps such as Trello and Asana can be a convenient and cost-effective method for keeping your projects and tasks organized, without hiring a virtual assistant. Most apps offer basic productivity free of costs, but you may be able to access more advanced paid features as your budget grows. To make the most of your time, using accounting software for your new venture can also help free up your energy for other projects. Finally, don’t forget to add value to your social media presence by using social media marketing tools to connect with customers and drive your success.

You don’t need a full-time staff to succeed as an entrepreneur. You just need the right help and tools to manage that success, so use the tips above to connect with freelancers, find helpful tech, and avoid legal issues so your new startup can really begin to thrive!

The post How to Get The Tech and Help You Need as a Solopreneur Without Any Hassle first appeared on Five23.

This mistake can cost your new startup a fortune and can be easily avoided. Taking proactive steps in the beginning of your startup can ensure that you have all the right to your name. Things like trademark and registration searches are key. With this in mind, the following is a guide to help you with trademark and brand protection for your startup.

What Should You Trademark?

Often startup shave no idea what should protected by trademark registration, since it extends much further than just the company name. Here are a few items which you should consider trademarking to protect your startup. 

Company Name

First, as a small business you should always protect your company name. Your company’s name is how consumers and clients find you and your goods and services. Without protection a competitor can open shop under a highly similar name and begin to take business from you by confusing your clients. A Trademark on your name is the easiest way to protect against this scenario from happening. 

Product Names

Just like with your company name, consumers also locate your goods and services through your product names. As such, if you provide a product or a service under a particular name you must also protect the same to avoid competitors from using like names on their goods or services. A good example of this are device names, most of us know ‘iPhone’, ‘Android’, etc. These are simple ways to protect your product from infringement. 

Logos

In addition to the above, logos can also be protected by trademarks. This will stop competitors from using like images for their goods or services. For example, no one is able to use the Nike Swoosh but Nike themselves. This is an example of a trademark on a logo. 

Marketing & Advertising Slogans

If you use a particular phrase or slogan in your marketing, you may be able to protect it through a trademark on the words. You can see examples of this with many fast food restaurants, such as McDonald’s, “I’m lovin’ it!”, or Papa John’s, “Better ingredients, better pizza, Papa John’s”. 

Benefits of a Trademark

Often startups wonder if trademarking is worth the cost and effort in the early stages of the company. The answer is: Yes! In addition to the potential savings of avoiding a costly rebranding after learning that the name you have been using is trademarked by another company below are a few other ways you can save money. Vice versa, if you do not have a trademark, these items may affect you. 

Deterrence

Having your trademark registered with the U.S. Patent and Trademark Office makes them easier to uncover by those doing trademark searches to see if their own trademark is available to be registered. This in turn helps to prevent the adoption of confusingly similar marks by third parties who may not choose a specific trademark similar to yours if they see your trademark is already registered with the U.S. Patent and Trademark Office, or the equivalent authority in your respective country. 

Registration Symbol ® 

Only trademarks that have been registered with the U.S. Patent and Trademark Office have the authorization to use the ® symbol in their advertising and marketing. The right to use the ® symbol in connection with your trademark may deter potential infringers from adopting or using a similar trademark to yours. It is also a great way to communicate that your brand is legitimate and valuable in a crowded field of imposters and cheap knock off brands.

Damages

Unfortunately, the reality is that companies often have to resort to filing lawsuits to enforce trademarks against infringers that don’t respond to cease and desist letter. When your trademark is registered it increases the type of monetary damages you can demand in a lawsuit if it is later infringed upon such as the ability to recover lost profits associated with the infringement including the possibility of receiving treble damages in certain circumstances as well as recovering attorneys fees. Essentially, having a trademark registration can pay for itself many times over.

Block Importation of Infringing Goods

If your trademark is used in connection with goods this is a key factor. Once registered, your trademark registration can be provided to the U.S. Customs and Border Protection Agency to help block the importation of goods that infringe on your trademark. More and more with products we are seeing this becoming a necessary step to stop product infringement. 

Takedown Notices

In the age of digital commerce where brands are distributed in online marketplaces around the world. One of the most powerful tools at your disposal is the ability to use takedown notices against counter-fitters and unauthorized distributors. This allows you to have the product / service removed based on registered trademark. It’s a fairly straightforward process that all major retailers and service providers adhere to. 

How to Protect Your Trademark (Process)

#1 Check if Your Name is Available

If you have yet to begin to use your product or service name, it is imperative that you research to see if it is available. A properly conducted research report will let you know if the name you seek is available to be registered before you incur the expense of the non-refundable government filing fees required for registration. Also, a research report will ensure you are not adopting and using a name that is infringing upon another’s trademark. If this occurs, you could be forced to give up use of your name and even pay damages to the entity you have infringed upon. A research report will avoid these issues and make sure your name is available. 

#2 Register Your Trademark

Once you have determined your desired name is available to trademark you should immediately apply to register it with the U.S. Patent and Trademark Office. Since trademark rights can be acquired either when you first use your trademark or first to file for an intent to use the same, it is imperative you get a trademark application on file with the USPTO as soon as possible to secure your rights in the trademark before someone else does. 

#3 Monitor For Infringement

Once you have a trademark you need to make sure that no one else adopts and begins use of a confusingly similar trademark. Trademark infringement costs businesses hundreds of millions of dollars each year in lost revenue. Even if a competitor begins use of a similar, albeit not identical trademark to yours, if can still funnel clients away from you business. In essence, competitors create confusion between your and their goods and services by adopting a similar trademark to yours. They then use the good will you have created in your trademark through your marketing to otherwise steal your clients and / or products. 

#4 Police Your Trademark

When infringement of your trademark is discovered, you must act quickly to stop the same. There are numerous ways to enforce your trademark depending upon how it is being infringed upon. For instance, if a competitor has registered and is using a domain name that is similar to your trademark, a domain name dispute may be the right tool to use. If a competitor is simply using a similar trademark on their website, then sending a cease and desist letter or possibly suing them in court may be the best option. Or if they have applied to register a confusingly similar trademark with the U.S. Patent and Trademark Office. 

Final Notes

For many businesses, their brand is their most valuable asset. Through a few judicious steps in seeking trademark protection, monitoring use by others, and policing infringement, you can ensure that your company brand is secured and flourishes with the growth of your business. You can learn more about trademarks and intellectual property protection by visiting the U.S. Patent and Trademark Office (USPTO) here. 

To see what Five23 can do for your startup. Please feel free to contact us here, or by email: contact@five23.io. 

The post Why Trademarks are Important to Startups first appeared on Five23.

“(a) Rules Relating to Constructive Receipt.— 

“(1) Plan Failures.— 

“(A) Gross Income Inclusion.— 

“(i) In general.—If at any time during a taxable year a nonqualified deferred compensation plan—

“(I) fails to meet the requirements of paragraphs (2), (3), and (4), or

“(II) is not operated in accordance with such requirements, all compensation deferred under the plan for the taxable year and all preceding taxable years shall be includible in gross income for the taxable year to the extent not subject to a substantial risk of forfeiture and not previously included in gross income. 

“(ii) Application only affected participants.— Clause (i) shall only apply with respect to all compensation deferred under the plan for participants with respect to whom the failure relates.

“(B) Interest and Additional Tax Payable with Respect to Previously Deferred Compensation.—

“(i) In general.— If compensation is required to be included in gross income under subparagraph (A) for a taxable year shall be increased by the sum of— 

“(I) the amount of interest determined under clause (ii), and

“(II) an amount equal to 20 percent of the compensation which is required to be included in gross income.

“(ii) Interest.— For purposes of clause (i), the interest determined under this clause for any taxable year is the amount of interest at the underpayment rate plus 1 percentage point on the underpayments that would have occurred had the deferred compensation been includible in gross income for the taxable year in which first deferred or, if later, the first taxable year in which such deferred compensation is not subject to a substantial risk of forfeiture. 

“(2) Distributions.— 

“(A) In general.— The requirements of this paragraph are met if the plan provides that compensation deferred under the plan may not be distributed earlier than— 

“(i) separation from service as determined by the Secretary (except as provided in subparagraph (B)(i)),

“(ii) the date the participant becomes disabled (within the meaning of subparagraph (C)), 

“(iii) death, 

“(iv) a specified time (or pursuant to a fixed schedule) specified under the plan at the date of the deferral of such compensation, 

“(v) to the extent provided by the Secretary, a change in the ownership or effective control of the corporation, or in the ownership of a substantial portion of the assets of the corporation, or

“(vi) the occurrence of an unforeseeable emergency.

“(B) Special Rules.— 

“(i) Specified employees. —In the case of any specified employee, the requirement of subparagraph (A)(i) is met only if distributions may not be made before the date which is 6 months after the date of separation from service (or, if earlier, the date of death of employee). For purposes of the preceding sentence, a specified employee is a key employee (as defined in section 416(i) without regard to paragraph (5) thereof) of a corporation any stock in which is publicly traded on an established securities market or otherwise. 

“(ii) Unforeseeable emergency.— For purposes of subparagraph (A)(vi)— 

“(I) In general.— The term ‘unforeseeable emergency’ means a severe financial hardship to the participant resulting from an illness or accident of the participant, the participant’s spouse, or a dependent (as defined in section 152(a)) of the participant, loss of the participant’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the participant.

“(II) Limitation on distributions.— The requirement of subparagraph (A)(vi) is met only if, as determined under regulations of the Secretary, the amounts distributed with respect to an emergency do not exceed the amounts necessary to satisfy such emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the participant’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship).

“(C) Disabled.— For purposes of subparagraph (A)(ii), a participant shall be considered disabled if the participant—

“(i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or

“(ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the participant’s employer. 

“(3) Acceleration of Benefits.— The requirements of this paragraph are met if the plan does not permit the acceleration of the time or schedule of any payment under the plan, except as provided in regulations by the Secretary.

“(4) Elections.— 

“(A) In General.— The requirements of this paragraph are met if the requirements of subparagraphs (B) and (C) are met.

“(B) Initial Deferral Decision.—

“(i) In general.— The requirements of this subparagraph are met if the plan provides that compensation for services performed during a taxable year may be deferred at the participant’s election only if the election to defer such compensation is made not later than the close of the preceding taxable year or at such other time as provided in regulations.

“(ii) First Year of Eligibility.—In the case of the first year in which a participant becomes eligible to participate in the plan, such election may be made with respect to services to be performed subsequent to the election within 30 days after the date the participant becomes eligible to participate in such plan. 

“(iii) Performance-Based Compensation.— In the case of any performance-based compensation based on services performed over a period of at least 12 months, such election may be made no later than 6 months before the end of the period. 

“(C) Changes in Time and Form of Distribution.— The requirements of this subparagraph are met if, in the case of a plan which permits under a subsequent election a delay in a payment or a change in the form of payment—

“(i) the plan requires that such election may not take effect until at least 12 months after the date on which the election is made,

“(ii) in the case of an election related to a payment not described in clause (ii), (iii), or (vi) of paragraph (2)(A), the plan requires that the first payment with respect to which such election is made be deferred for a period of not less than 5 years from the date such payment would otherwise have been made, and

“(iii) the plan requires that any election related to a payment described in paragraph (2)(A)(iv) may not be made less than 12 months prior to the date of the first scheduled payment under such paragraph. 

“(b) Rules Related to Funding.—

“(1) Offshore Property in a Trust.— In the case of assets set aside (directly or indirectly) in a trust (or other arrangement determined by the Secretary) for purposes of paying deferred compensation under a nonqualified deferred compensation plan, for purposes of section 83 such assets shall be treated as property transferred in connection with the performance of services whether or not such assets are available to satisfy claims of general creditors— 

“(A) at the time set aside if such assets (or such trust or other arrangement) are located outside of the United States, or 

“(B) at the time transferred if such assets (or such trust or other arrangement) are subsequently transferred outside of the United States.

This paragraph shall not apply to assets located in a foreign jurisdiction if substantially all of the services to which the nonqualified deferred compensation relates are performed in such jurisdiction.

“(2) Employer’s Financial Health.— In the case of compensation deferred under a nonqualified deferred compensation plan, there is a transfer of property within the meaning of section 83 with respect to such compensation as of the earlier of— 

“(A) the date on which the plan first provides that assets will become restricted to the provision of benefits under the plan in connection with a change in the employer’s financial health, or

“(B) the date on which assets are so restricted, whether or not such assets are available to satisfy claims of general creditors.

“(3) Income Inclusion for Offshore Trusts and Employer’s Financial Health.— For each taxable year that assets treated as transferred under this subsection remain set aside in a trust or other arrangement subject to paragraph (1) or (2), any increase in value in, or earnings with respect to, such assets shall be treated as an additional transfer of property under this subsection (to the extent not previously included in income).

“(4)Interest on Tax Liability Payable with Respect to Transferred Property.—

“(A) In General.— If amounts are required to be included in gross income by reason of paragraph (1) or (2) for a taxable year, the tax imposed by this chapter for such taxable year shall be increased by the sum of— 

“(i) the amount of interest determined under subparagraph (B), and 

“(ii) an amount equal to 20 percent of the amounts required to be included in gross income. 

“(B) Interest.— For purposes of subparagraph (A), the interest determined under this subparagraph for any taxable year is the amount of interest at the underpayment rate plus 1 percentage point on the underpayments that would have occurred had the amounts so required to be included in gross income by paragraph (1) or (2) been includible in gross income for the taxable year in which first deferred or, if later, the first taxable year in which such amounts are not subject to a substantial risk of forfeiture.

“(c) No Interference on Earlier Income Inclusion or Requirement of Later Inclusion.— Nothing in this section shall be construed to prevent the inclusion of amounts in gross income under any other provision of this chapter or any other rule of law earlier than the time provided in this section shall not be required to be included in gross income under any other provision of this chapter or any other rule of law later than the time provided in this section. 

“(d) Other Definitions and Special Rules.— For purposes of this section:

“(1) Nonqualified Deferred Compensation Plan.— The term ‘nonqualified deferred compensation plan’ means any plan that provides for the deferral of compensation, other than—

“(A) a qualified employer plan, and

“(B) any bona fide vacation leave, sick leave, compensatory time, disability pay, or death benefit plan. 

“(2) Qualified Employer Plan.— The term ‘qualified employer plan’ means— 

“(A) any plan, contract, pension, account, or trust described in subparagraph (A) or (B) of section 219(g)(5)(without regard to subparagraph (A)(iii)),

“(B) any eligible deferred compensation plan (within the meaning of section 457(b)), and 

“(C) any plans described in section 415(m).

“(3) Plan Includes Arrangements, Etc.— The term ‘plan’ includes any agreement or arrangement, including an agreement or arrangement that includes one person. 

“(4) Substantial Risk of Forfeiture.— The rights of a person to compensation are subject to a substantial risk of forfeiture if such person’s rights to such compensation are conditioned upon the future performance of substantial services by any individual. 

“(5) Treatment of Earnings.— References to deferred compensation shall be treated as including references to income (whether actual or notional) attributable to such compensation or such income. 

“(6) Aggregation Rules.— Except as provided by the Secretary, rules similar to the rules of subsection (b) and (c) of section 414 shall apply.

“(e) Regulations.— The Secretary shall prescribe such regulations as may be necessary  or appropriate to carry out the purposes of this section, including regulations— 

“(1) providing for the determination of amounts of deferral in the case of a nonqualified deferred compensation plan which is a defined benefit plan, 

“(2) relating to changes in the ownership and control of a corporation or assets of a corporation for purposes of subsection (a)(2)(A)(v),

“(3) exempting arrangements from the application of subsection (b) if such arrangements will not result in an improper deferral of United States tax and will not result in assets being effectively beyond the reach of creditors,

“(4) defining financial health for purposes of subsection (b)(2), and
“(5) disregarding a substantial risk of forfeiture in cases where necessary to carry out the purposes of this section.”.

“(b) Treatment of Deferred Amounts.— 

(1) W-2 Forms.— 

(2) In general.— Subsection (a) of section 6051 (relating to receipts for employees) is amended by striking “and” at the end of paragraph (11), by striking the period at the end of paragraph (12) and inserting “, and”, and by inserting after paragraph (12) the following new paragraph:

“(13) the total amount of deferrals for the year under a nonqualified deferred compensation plan (within the meaning of section 409A(d))”

(B) Threshold.— Subsection (a) of section 6051 is amended by adding at the end the following: “In the case of the amounts required to be shown by paragraph (13), the Secretary may (by regulation) establish a minimum amount of deferrals below which paragraph (13) does not apply.”.

(2) Wage Withholding.— Section 3401(a) (defining wages) is amended by adding at the end the following flush sentence:

“The term ‘wages’ includes any amount includible in gross income of an employee under section 409A and payment of such amount shall be treated as having been made in the taxable year in which the amount is so includible.”.

(3) Other Reporting.— Section 6041 (relating to information at source) is amended by adding at the end the following new subsection:

“(g) Nonqualified Deferred Compensation.— Subsection (a) shall apply to—

“(1) any deferrals for the year under a nonqualified deferred compensation plan (within the meaning of section 409A(d)), whether or not paid, except that this paragraph shall not apply to deferrals which are required to be reported under section 6051(a)(13) (without regard to any de minimis exception), and 

“(2) any amount includible under section 409A and which is not treated as wages under section 3401(a).”.

(c) Clerical Amendment.— The table of sections for such subpart A of part I of subchapter D of chapter 1 is amended by adding at the end the following new item:

“Sec. 409A. Inclusion in gross income of deferred compensation under non qualified deferred compensation plans.”.

(d) Effective Date.—

(1) In general.— The amendments made by this section shall apply to amounts deferred after December 31, 2004. 

(2) Special Rules.—

(A) Earning.— The amendments made by this section shall apply to earnings on deferred compensation only to the extent that such amendments apply to such compensation. 

(B) Material Modifications.— For purposes of this subsection, amounts deferred in taxable years beginning before January 1, 2005, shall be treated as amounts deferred in a taxable year beginning on or after such date if the plan under which the deferral is made is materially modified after October 3, 2004, unless such modification is pursuant to the guidance issued under subsection (f).

(3) Exception for Nonelective Deferred Compensation.— the amendments made by this section shall not apply to any nonelective deferred compensation to which section 457 of the Internal Revenue Code of 1986 does not apply by reason of section 457(3)(12) of such Code, but only if such compensation is provided under a nonqualified deferred compensation plan—

(A) which was in existence on May 1, 2004,

(B) which was providing nonelective deferred compensation described in such section 457(e)(12) on such date, and

(C) which is established or maintained by an organization incorporated on July 2, 1974. If, after May 1, 2004, a plan described in the preceding sentence adopts a plan amendment which provides a material change in the classes of individuals eligible to participate in the plan, this paragraph shall not apply to any nonelective deferred compensation provided under the plan on or after the date of the adoption of the amendment. 

(e) Guidance Relating to Change of Ownership or Control.— Not later than 90 days after the date of the enactment of this Act, the Secretary of the Treasury shall issue guidance on what constitutes a change in ownership or effective control for purposes of section 409A of the Internal Revenue Code of 1986, as added by this section.

(f) Guidance Relating to Termination of Certain Existing Arrangements.— Not later than 60 days after the date of the enactment of this Act, the Secretary of the Treasury shall issue guidance providing a limited period during which a nonqualified deferred compensation plan adopted before December 31, 2004, may, without violating the requirements of paragraphs (2), (3), and (4) of section 409A(A) of the Internal Revenue Code of 1986 (as added by this section), be amended—

(1) To provide that a participant may terminate participation in the plan, or cancel an outstanding deferral election with regard to amounts deferred after December 31, 2004, but only if amounts subject to the termination or cancellation are includible in income of the participant as earned (or, if later, when no longer subject to substantial risk of forfeiture), and

(2) to conform to the requirements of such section 409A with regard to amounts deferred after December 31, 2004.

Link to U.S. Congress.Gov Tax Code: (https://www.congress.gov/108/plaws/publ357/PLAW-108publ357.pdf).

The post Internal Revenue Service (IRS): 409A Valuation first appeared on Five23.

1. Lack of Preparation

Perhaps the number one mistake that new startup entrepreneurs make is the lack of preparation itself. A “One size fits all” approach to you startup is a disaster. Just like clients, each investor is different. Study the fund’s background, understand their investment thesis, gauge their mindset, and know why you want an investment from them (outside of capital, what else can they provide you?). Many startup founders are completely unprepared when entering the board room. Business plans are not required in the pitch meeting (in most cases), however, you need to be able to answer questions about the business plan. Practicing your pitch with each type of investor will help you in the long run and give you ample opportunity to perfect your pitch. Giving you the preparedness you need to nail the meeting and close the investment.

2. Unrealistic Expectations

The majority of entrepreneurs set the bar too high with unreasonably high expectations. They think an investment will change their life and make the startup instantly successful. In reality, this is almost never the case. Founders must set reasonable expectations of growth, revenue, profitability, and financials; backed by strong market research. Even if your product or service may be unique, build a logical approach to why your assumptions are valid. This will help to set your own expectations at a reasonable level. Furthermore, it can give you a clear mindset when approaching expectations with investors.

3. The Drama of Fundraising

Being an entrepreneur is definitely an exciting journey. However, the majority of founders lose their focus when they get excited about the fund raising process. The ultimate goal of fundraising is to obtain enough money to be able to fund the stage of your process. This could be product development, client outreach, human capital, etc. Entrepreneurs need to keep this in mind rather than just closing an investor. The majority of investors will see this, and may lose interest.

4. Value Proposition

While many startups are built on a unique idea, some of them are a “copy-paste” of an existing idea. Many founders are inclined to thing their “copy-paste” idea will be funded, because several similar startups have been funded. The problem with this approach is the lack of a clear value proposition. Questions entrepreneurs can ask themselves; Why is your startup different? How is it unique from the rest of your competition? Are you offering the same product / service in a niche segment as others? Are you offering the same product or service? Has the market seen your product / service before? Having a clear value proposition, product positioning, and product differentiation increase your chance of receiving funding.

5. Lack of a Clear Strategy

The success mantra for a startup is having the right product, the right team, a clear product need, and a solid action plan. Many startups fail in these items due to a clear action plan. Missing a clear action plan leads to confusion, higher capital burns, and a higher chance of startup failure. All startups should have a plan of a set of dynamically changing milestones across all time frames (short, medium, long).

6. Justifiable Valuation

If you walk into an investor meeting seeking, $1.5mm at a valuation of $15mm (10% of the company), you have to be able to justify it. The vast majority of startups cannot, they say they need ‘x’ amount of money to obtain ‘y’. This model is backwards. Entrepreneurs first need to determine their value then they can properly decide how much money to raise. With this model, startups need to discover what they can do with the money they are able to raise. This gives more confidence to investors when they are analyzing your company for investment. They know what you are going to do with the money and are able to justify your value.

Understand the value of your company may be difficult, and many mistakes can be made along the way. Five23 helps entrepreneurs and startups overcome these six items and determine the value of your company. By being an unbiased third party, we can determine value and analyze without prejudice. To learn more about what we offer startups, please follow the link here or contact us via email: contact@five23.io.

The post Top 6 Mistakes Entrepreneurs Make with Investors first appeared on Five23.