New Venture Partners: Top Thirteen Things You Should Know

Certified Public 
Accountantby Steven Singer, CPA
Greenstein, Rogoff, Olsen & Co., LLP

Updated: 6/16/10

Business Issue

  1. Establish due date for estimated capital calls
  2. Review personal liability insurance
  3. Review medical insurance issues
  4. Prepare personal cash flow forecast & balance sheet
  5. Carried interest: 4 - 6 years away (Don't spend until in your pocket)
  6. Partnership buy-ins ARE negotiable


Taxation Issue

  1. Be aware of quarterly due dates: 1/15, 4/15, 6/15, 9/15, 12/31
  2. Sock away money for estimated quarterly income taxes
  3. Have tax person give you % of quarterly draw for taxes
  4. Currently capital gain treatment may be ordinary in future
  5. Importance of 83(b) elections

Estate Planning

  1. Review wills and living trusts
  2. Consider level term life insurance (Irrevocable life insurance trust)

Preventable War Stories

  • Purchasing bigger home when making partner.
    • Not projecting cash flow needs and having to take out emergency home equity line for capital calls and estimated taxes.
  • Partner passes away three years after making partner, leaves spouse and kids with no source of income.
  • Partner contracts cancer which goes into remission.
    • Leaves current firm and is now uninsurable because of pre-condition.
  • Partner gets sued by contractor working on home improvement.
  • While on business trip tax deadlines are not taken into account.
    • Spouse does not know what to do and financial advisor forced to liquidate funds at an inopportune time.
  • Partner passes away, leaves his half of community property to ex-spouse.