AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
Nigerian startups often offer US-based developers a mix of cash and equity, and the two are treated differently: cash fees go on Schedule C with self-employment tax, while shares received for work are generally taxable at their fair market value when they vest, or when granted if you file a section 83(b) election within 30 days. A written contract covering milestones, code ownership and the equity terms protects both sides.
Why these engagements are different
Early-stage Nigerian startups hire diaspora developers for good reasons: experience with US-standard stacks, time-zone overlap with Europe and the US, and contacts with foreign investors. The other side is that many are pre-revenue, budgets move with funding rounds, and cash is tight. That is why equity-for-work offers are common, and why the contract and tax position need more care than a normal client job.
Reading the offer
Offers usually come in one of four shapes. Ask which one you are being offered, in writing.
| Offer | What you get | Main risk |
|---|---|---|
| Full cash | Agreed fee per milestone or month | Late payment if a round slips |
| Cash plus shares | Lower fee plus a number of shares in the Nigerian company or its holding company | Shares may be worth nothing; tax may still apply |
| Cash plus options | Right to buy shares later at a set price | Plan rules, vesting and exercise terms vary widely |
| Equity only | Shares or options instead of any fee | You fund the work yourself and carry all the risk |
Find out which company is issuing the equity. Many Nigerian startups sit under a Delaware or other foreign holding company, with the Lagos company as a subsidiary. Equity in the holding company is usually what investors hold; equity in the Nigerian operating company may be harder to sell later.
Contract points for developers
- Milestones tied to features or releases, each with its own invoice and acceptance step.
- Code ownership: copyright in the code passes on payment of each milestone, not on signing.
- Repository access: who owns the GitHub or GitLab organisation and the cloud accounts, and when admin rights move to the client.
- Open-source and third-party licences you use, listed so the client knows what it is inheriting.
- For equity: number and class of shares or options, the issuing company, vesting schedule, what happens if the engagement ends early, and a date by which the paperwork will be signed.
- Currency and withholding tax: fee in USD or naira, gross or net of Nigerian withholding tax.
Our contract points for Nigerian clients cover late payment, disputes and governing law in more detail.
Pricing the mix
Start from your normal cash rate for the work, then decide how much of it you can afford to defer. If you would usually charge $30,000 and the startup offers $15,000 plus equity, you are effectively investing $15,000 of your time in an unlisted company with no guarantee of a sale. Treat it the way an investor would: ask for the cap table, the last valuation and the runway in months. Keep the cash part large enough to cover your own costs and the US tax on the whole package, because tax on equity can fall due before the shares can be sold.
Tax on the cash part
For a US tax resident, cash fees from a Nigerian client are self-employment income reported on Schedule C. The IRS sets self-employment tax at 15.3% of net earnings from $400. The client may deduct Nigerian withholding tax: PwC's table (reviewed May 2026) shows 10% for non-resident individuals on technical, consultancy and professional fees. Ask for the receipt, because it supports a possible US foreign tax credit. With no US-Nigeria tax treaty, that credit, not a reduced Nigerian rate, is the main protection against paying twice.
Tax on the equity part
Shares received for services are property received as pay. Under section 83, if the shares can be forfeited until they vest, the general rule is that you include their value in income when they vest. IRS Form 15620 sets out the alternative: a section 83(b) election to include the value, less anything you paid, at the time the shares are transferred. The election must be filed no later than 30 days after the transfer, with a copy to the company.
At an early-stage startup, shares may be worth very little at grant, so electing can mean little tax now and no tax at vesting, with later growth taxed as a capital gain on sale. The risk is paying tax on shares that later become worthless. Options follow different rules. Our companion guide on taking equity for freelance work goes through both, plus the US reporting forms for foreign shares.
Worked example (illustrative)
Femi, a developer in Houston, agrees $20,000 cash plus 20,000 shares in a startup's holding company, vesting over 12 months. The company's valuation puts the shares at $0.05 each at grant, $1,000 in total. If he files an 83(b) election within 30 days, he reports $1,000 of income now. Without it, he reports the value of each batch of shares as it vests, which could be far higher if the startup raises a round at a bigger valuation mid-year. The $20,000 cash goes on Schedule C either way. These are example figures only, and the right choice depends on facts a tax professional should review.
Where Pryme fits
Startup clients in Nigeria can pay milestone fees into a Pryme account opened from the US in naira or dollars, and you convert with Swap when it suits you, rate and fee shown first. A verifiable receipt from VerifyDoc.ai gives you a record of each payment for your Schedule C.
Questions people ask
Should I accept equity from a Nigerian startup instead of cash?
Only if you can afford to wait and the paperwork is clear: issuing company, share class, vesting and what happens if the engagement ends. Equity may be worth nothing.
Is equity from a foreign startup taxable in the US?
Generally yes, as pay for services: at vesting, or at transfer if you file a section 83(b) election within 30 days.
Will a Nigerian startup deduct tax from my fees?
It may. PwC's table shows 10% withholding tax for non-resident individuals on professional and technical fees.
Who owns the code I write for a Nigerian startup?
Whatever the contract says. Tie the transfer of copyright to payment of each milestone.
Sources
- IRS: Self-employment tax (Social Security and Medicare taxes) (reviewed 27 Jun 2026) · accessed Oct 2026
- PwC Worldwide Tax Summaries: Nigeria, withholding taxes (reviewed 29 May 2026) · accessed Oct 2026
- IRS: Form 15620, Section 83(b) Election (Rev. 4-2025) · accessed Oct 2026
- IRS: United States income tax treaties, A to Z (reviewed 3 Jan 2026) · accessed Oct 2026
- IRS: Foreign tax credit, how to figure the credit (reviewed 9 Jul 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.