Earlier quoted context omitted.
I have to agree, dude you are making 26k a year. Starting salary for a fresh junior is 40k and that is just someone who know HTML, CSS and Photoshop let alone if they actually know a server side language. He is lying about the 1099 being cheaper, that is only true if you are an S-Corporation, right now you are responsible for a little over 15% for social security, something that you are not if you are W2 or a corp. $…
"As for the "he has not taken any pay" crap, he has equity, you do not your only reward is your pay check in that situation." Very correct. On several occasions I have been promised equity. At first as a compensation for my pay, and then as vested. However none of this ever came into existence. Every time I brought it up again he would keep putting it off. But then in any discussions for a raise or anything to that d…
I'd work out what your market salary is. Then work out what you really need to live, support your family, and give you options over the next year. You then need to negotiate with your boss to either pay you at market rates, or at your actual needs but with some formal equity to make up the difference.
He won't be happy with any of this, and most likely you'll have to leave. It sounds like the whole start-up may fail if you do, if you're really the one holding it together. Hopefully your employer realises this during negotiations, but he may not be able to think about the issue rationally. On every occasion that someone I know has taken work beneath their market value, they've never successfully renegotiated their salary, even a year or two later, and have only received their true value at a new workplace.