In the US, if you are given shares of a company when you join, you must pay taxes on those shares. Let's say the startup is currently valued at $5M, and you ar

In the US, if you are given shares of a company when you join, you must pay taxes on those shares. Let's say the startup is currently valued at $5M, and you are given shares for 1%. You need to write a check to the IRS for your share of $50,000 in income. Alternatively, if you are give the equivalent number of options, you do not have any tax liability until you exercise those options. This is one reason (of many reasons) why it is almost unheard of for a startup to grant employees shares instead of options.