compensation
Can remuneration be accepted in the form of venture capital investment into a startup instead of usual formats like salary etc?
<p>Consider the following situation: I provide consultancy services which saves the client a very significant sum of money while also generating significant cash flow.</p>
<p>I plan to charge him $2 million as compensation for my services. I also have a plan to launch a startup. My client is also wanting to jump on board and is willing to provide this $2 million as venture capital in return for a minority stake. Is it okay to accept compensation in the form of venture capital? Further can I continue to do this for as long as I want? Will this be considered a form of tax evasion?</p>

<blockquote>
<p>Is it okay to accept compensation in the form of venture capital?</p>
</blockquote>
<p>So long as you are an independent contractor you can accept payment however you like. Employees, however, must be paid in cash in most jurisdictions.</p>
<blockquote>
<p>Further can I continue to do this for as long as I want?</p>
</blockquote>
<p>Sure.</p>
<blockquote>
<p>Will this be considered a form of tax evasion?</p>
</blockquote>
<p>Only if you don’t pay your taxes. You received $2 million in value for your services so you owe whatever income, sales and value added taxes etc. that are applicable. It doesn’t matter if you paid in cash or cowrie shells.</p>
<p><strong>However</strong>, I’m not sure you’re getting paid at all. You are selling a minority stake in your company for $2 million. What are you getting paid for your services? Just take the money, invest yourself and have no annoying minority partner.</p>

<p>If you call it/think of it as remuneration (as in your question) you are going to owe taxes and maybe worse. If you waive the fee and completely unrelated that client makes a bona fides investment in a real startup and gets stock in the start up that legitimately has a vale of $2m and the startup doesn't spend it all paying you to do nothing then this might pass muster.</p>
<p>If your intentions are scam-y, that matters.</p>
