QSBS Attestation

Introducing QSBS Attestation

27 November 2023
The Carta Team

Startups are the lifeblood of innovation and economic growth, but they can be risky to found or invest in, since many don’t make it past the first few years.  The U.S. government created the qualified small business stock (QSBS) exclusion to make investing  in small businesses more attractive to founders, investors, and early employees. It allows  holders of QSBS to potentially pay zero federal capital gains tax on up to $10 million or 10X their investment when selling their shares. That’s a lot of money! 

But when talking to our customers, we discovered too many people weren’t taking advantage of this tax benefit. 

That's why we're excited to announce Carta QSBS Attestation, a new offering that makes it simple for companies to help their shareholders take advantage of potential tax savings. We wanted to make determining a company’s QSBS status and obtaining the necessary legal documentation to provide to shareholders as simple for founders and CFOs as requesting their 409A.  

Join Carta

Take advantage of QSBS tax savings

Get your attestation letter and ongoing expert QSBS guidance, so you can save on taxes.

QSBS Attestation includes three core features designed to help shareholders pay less in taxes and attract more investors:

QSBS eligibility review and attestation letter  

An attestation letter is important because it confirms QSBS eligibility and provides proper documentation for investor and employee shareholders to use when filing taxes upon sale of shares. Plus, many investors investing in Seed to Series B companies will ask for proof that the stock they are buying is QSBS-eligible, since the designation can save them up to 10X their investment in capital gains taxes.  

With QSBS Attestation, you’ll always have the proper documentation on hand  for investor and employee shareholder requests. Carta checks if you are QSBS eligible every year, and if you qualify, we’ll automatically provide you with an attestation letter. Since we already manage your cap table and conduct your 409A, our QSBS specialists have the information they need to assess your company’s QSBS eligibility without any extra lift on your part. 

Personalized QSBS advisory sessions

With Carta, you're not just getting a service—you're gaining a partner. With QSBS Attestation, you’ll get a one-on-one session with our valuations team when you receive your letter. These sessions are tailored to address crucial issues  like the implications of QSBS for your company, best practices for maintaining compliance, and events that could disqualify QSBS eligibility.

Ongoing compliance support

There are nuances to the QSBS exemption that can make it easy to unknowingly disqualify your company’s QSBS status. That’s why we provide continuous support to help you navigate questions and decisions that could impact your QSBS status—like evaluating the effects of raising another round, cash management strategies, or structuring secondary transactions.

Why choose Carta for QSBS attestation?

  • Effortless: Since Carta has direct access to your cap table, you won’t have to spend hours compiling documents and financial records. We’ll automatically check for QSBS eligibility every time your company gets a 409A valuation and send you an attestation letter within 10 business days.

  • Accurate: As your cap table's system of record, we have the most accurate and up-to-date equity holdings and transaction dates, helping to confirm that your QSBS eligibility is both accurate and defensible.

  • Cost-effective:  QSBS attestation letters typically cost between $10,000-$15,000. For companies nearing IPO, they can cost as much as $25,000. Carta provides the same documentation for a fraction of the cost.

  • Proactive: We’ll alert you if your company could be QSBS-eligible. Once we’ve confirmed your company’s QSBS status, we’ll automatically mark all QSBS-verified and QSBS-eligible shares for you and your employees, so you can make informed decisions with your equity. 

With Carta QSBS Attestation, you’ll get the attestation letter and expert guidance you need to pay potentially zero federal capital gains taxes when you, your investors, and your employees sell shares. And the best part is that with Carta, the process is seamless. We’ll automatically check your QSBS eligibility when you request your 409A.