Re:Practical startup question: Do you founders pay for healt...
by zach on Wednesday April 04, 2007 @12:08AM
(#8704)
Great question. Short answer, yes.
First, the way things are structured tax-wise, C corporations get to deduct founder health insurance 100%, so that's the most tax-advantaged scenario. If you pay for your own personal health insurance or do it as a sole proprietorship, etc. you're basically getting a raw deal from Congress.
I'm in California, where basically any 2+ person small business that's been around about like 3-6 months is guaranteed group health insurance for its employees at no more than 10% over an index that represents what bigger companies pay. It's a sweet deal. So if you're in California and are going to go this route, you may want to incorporate ahead of time to start that clock ticking.
So basically the company pays for the insurance for the founders, even though they're not drawing a salary. And you get much more flexible options than through COBRA (naturally) or personal insurance.
Re:Practical startup question: Do you founders pay for healt...
by juwo on Wednesday April 04, 2007 @08:54AM
(#8768)
Be clear about this: a tax deduction is not dollar for dollar. i.e. is NOT free. You are simply getting a discount based on your tax bracket. (this is for the posters from the U.K.)
First, the way things are structured tax-wise, C corporations get to deduct founder health insurance 100%, so that's the most tax-advantaged scenario. If you pay for your own personal health insurance or do it as a sole proprietorship, etc. you're basically getting a raw deal from Congress.
I'm in California, where basically any 2+ person small business that's been around about like 3-6 months is guaranteed group health insurance for its employees at no more than 10% over an index that represents what bigger companies pay. It's a sweet deal. So if you're in California and are going to go this route, you may want to incorporate ahead of time to start that clock ticking.
So basically the company pays for the insurance for the founders, even though they're not drawing a salary. And you get much more flexible options than through COBRA (naturally) or personal insurance.