I am a software developer and I am planning to take the big leap and leave my job next year to work on my own. I have been alerted to and advised about dealing with the IRD when running a company.
One of the things that has been mentioned to me which has raised some concern is the following case. If I go out and work on my own idea(s) and develop my own intellectual property for a period of time, say 2 years and then take on an outside investment for equity within my venture the IRD will tax me because they consider this income. Say for example if I were to receive an investment after two years of $250K for 25% of my venture the IRD will tax me as though I have earned around $100K per year.
My point of view is that this is not right and that the IRD should only be able to tax me based on the revenue that I earn. But then again if I am not earning anything for 2 years then all of sudden I get an investment for intellectual property that I have been developing over that time, I have earned that money even though I wasn't getting paid on a frequent basis e.g. weekly.
What are your thoughts or experiences with this?
And also is this case influenced by the way that I setup my organization? e.g. as a sole trader, company, trust.