If you run a business that generates revenue in crypto, please read this. There's a critically important detail to be aware of (at least in the US).

It covers:
• Whether to hold income in ETH or USD/C
• Bookkeeping basics
• Basic tax info

Read on if interested... (boring 🧵)
🚨🚨 This is not intended to replace advice from your tax advisor. Please talk to your CPA before making any decisions. 🚨🚨

In the US:
• When you make money from a job it's Ordinary Income.
• When you make/lose money from an investment, it's a Capital Gain/Loss
When someone buys your .25Ξ product, you immediately are taxed on that Ordinary Income for the USD value of the ETH at the time of sale. (let's say ETH is $2000, so that's $500 income).

To keep things simple, let's say you're taxed 50%, so you owe $250 to the government.
Now, let's say you're an ETH bull and want to hold the income in ETH. But, there's a dip and ETH drops to $1000.

You're $500 in income is now worth $250, which is what you owed the government.

But can't you offset the income with the loss?

The $500 of income is a different class of income/loss than the $250 loss of value.

You would still owe taxes on $500 of ordinary income.

And you would have a $250 capital loss.

These do not offset each other.
The nightmare scenario is ETH dropping more than your tax bill, and you end up owing more money than you have.

Sure, you'd have a large capital loss, but you'd still need to pay taxes on the ordinary income. Most businesses wont have big capital gains (at least at first).
Q: So, what do I do for PREMINT?

Every day, we convert all ETH to USDC. This means there's a tiny capital gain/loss if ETH changes, but it never puts us in a bad tax position.
Q: What if ETH rips?

We definitely will miss out on big capital gains if ETH runs to $10k. But we are a software business, not an investment firm.

If you are an ETH bull, take money out of the business and invest it yourself, personally. It's much cleaner that way.
Q: Should you keep it in USD or USDC?

This is totally up to you. We tend to keep a lot in USDC and then convert to USD when we need to pay taxes / operating expenses.

You just need to make sure it's easy to convert/withdraw when your business need it.
Q: What about bookkeeping?

It's a huge PITA. You need a journal entry for the USD value of the ETH at time of income, and another journal entry for the difference in value of the ETH when you convert it to USDC.

You'll also need an entry for USDC → USD but that's simple.
Q: What about DAO treasuries?

No idea. To be honest, they seem like a tax nightmare, but I'm sure there's a clean way to do it.
Q: It's crypto, can't I just not pay taxes?

This obviously isn't the path we chose to take. We run PREMINT like a regular business, paying people in fiat, having a normal bank account, etc..

Taxes are very painful, but I don't lose any sleep over worrying about a future audit.
Q: What about business expenses?

Legitimate business expenses (payroll, operating expenses, etc...) will offset all income. So, if you plan to spend all the money you make, you dont need to worry about a lot of this. Just make sure you can afford to pay your expenses.
🚨🚨 Again, this is not financial advice and you should talk to your CPA before making any decisions.

My goal is to make sure you're considering your tax liability a bit so you dont end up bankrupting your business unintentionally.

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More from @mulligan

Apr 11
Not to brag, but I think the Collector Pass NFT mint had perfect mechanics. I'd recommend copying it.

I'll turn this into a blog post at some point, but figured a thread would be a helpful

The two core elements that led to the sell out:

1. @PREMINT_NFT (obv)
2. Mint windows
1a. I heavily used @PREMINT_NFT

PREMINT solves gas wars and gives you (the creator) an idea of the interest of the project.

Was I sure that 0.25Ξ was the right price? No. So I launched a PREMINT list saying that was the price, and 36k people signed up.

So, it was fine.
1b. I heavily used PREMINT Collabs

I offered over 100 communities spots on the allow list through PREMINT Collabs (premint.xyz/collabs).

70% of the allowlist was from these communities, which were all real collectors, not bots.
Read 7 tweets
Jan 4, 2021
Recently, I’ve talked about how I've spent the last 16 months: building products, coaching startups, & angel investing.

I've decided to double-down on building in 2021.

Today, I join @JoinCommonstock as Head of Product.

I feel like I won the lottery. commonstock.com
Commonstock’s mission is to improve the world’s financial health by making quality investing knowledge easy to access and easy to share.

Users connect their brokerage account(s) and share their portfolio performance without disclosing the dollar value of their assets.
A universal truth of investing is that there’s always room to improve, and there’s always more knowledge to uncover.

Commonstock already has a wonderfully supportive [almost cult-like] community that spends time educating each other about financial opportunities.
Read 6 tweets
Jan 4, 2021
Last week, I said I'd share a bit about angel investing but got distracted.

In 2020, I ramped up my angel investing. I invested personally and as a Sequoia scout.

I ended the year thrilled about being more active, but glad I'm a builder not a full time investor.

Quick thread:
Investing in founders is a privilege.

The cliche is right: You get to spend all your time learning from people with expertise in things you know nothing about.

The time with them is a gift.
I've historically lacked capital to invest in startups (and not taken the @sacca-style credit card debt route).

I was friends with the first CEO of @Uber, @intercom, @loom, and a few other massive companies.

But no $, so no investment. Lots of regret.
Read 15 tweets
Dec 30, 2020
For over a year now, I’ve been coaching CEOs and product managers at startups.

Think executive coaching, specifically around product & execution.

Success = formalizing the product process then hiring a VP Product to come in and immediately fire me.

Here are some thoughts ..
First, why was I doing this?

I strongly believe in coaching/therapy. My coach, @khalidhalim, kept me sane and healthy during the rollercoaster of running a startup.

Also, it became clear that there was an opportunity for more tactical coaching.
When I left Google, I got inundated with interest to join early stage companies. Most of these CEOs had one of two product problems:

1. They didn't feel like they had a grasp on what "product" was
2. They felt like their product process was broken
Read 17 tweets
Dec 29, 2020
Most projects from my product studio thread were tiny little ideas never intended to go anywhere.

That was the freedom of the whole thing. It wasn’t supposed to lead to tons of successes.

It was way more about the journey than the destination.

Here are 7 learnings...
1. I wish I'd set public intention.
2. My peer group was invaluable.
3. For me, alone was right.
4. Product portfolios are hard.
5. Studios tend to be labs.
6. Every project is easier because of the one before it.
7. It’s a wonderfully, creative model.

Details below...
1. I wish I’d be more public about my goals and plans for the projects.

From the outside, it seems like I was launching a bunch of silly little projects instead of going through an exercise to build back my zero-to-one muscles with intentionally quick/simple projects.
Read 10 tweets
Dec 29, 2020
I ran a bootstrapped product studio for the past 12 months. We released 10 products. One worked well.

Here's the rundown of what I built.
To frame my mental state, this came at the heels of a 6yr startup cycle — 3 building @Cluster/@LaunchKit and 3 as a post-acquisition @Google PM working on @Firebase & @GoogleWorkspace.

I was excited to go 0→1 again. I wanted to do it over & over. The studio model felt perfect.
So, I left Google and immediately started building. My approach:

1. Build tiny things that can go from idea→launch very quickly
2. Avoid any big/complex problems
3. Simple, simple, simple

My goal was to start flexing the builder muscle again, which had atrophied a bit @ BigCo.
Read 26 tweets

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