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Wouldn't you just sell your stock immediately and use that cash to pay the tax? Perhaps I'm missing something.
by ryanSrich 10y ago
Wouldn't you just sell your stock immediately and use that cash to pay the tax? Perhaps I'm missing something.
- smeyer 10y agoI think you're missing that the stock might not be liquid. If you're an employee at a pre-IPO startup, you might not be able to just exercise your options and immediately sell some of the stock (since there's no public market and you may be restricted from various private sales). But you may still want to exercise the options (because you're leaving the company, you're worried about a larger tax bill down the road, etc.)
- chrdlu 10y agoAs smeyer pointed out, for most startups, employees are not allowed to sell/transfer the shares. Startups like to keep the cap table locked down and have no incentive to allow their employees sell. Sometimes, the company will allow a new investor to buy a % of the common shares from employees (usually when the company does not want additional dilution). For the average startup (ones that are not as well known as Uber, Unity, etc), there is little to no secondary market.