6 ms·
Finally, I'd also like to note that, given the proximity of this hire to your series A funding, you may want to consider the tax implications involved in granti
by onlawschool 15y ago
Finally, I'd also like to note that, given the proximity of this hire to your series A funding, you may want to consider the tax implications involved in granting an equity stake to an employee.
If the company is valued at $30 million, then granting a new hire 10% of the stock in the company might be viewed as a taxable event by the IRS. In that case, your employee might find himself responsible for paying taxes on $3 million in income. You don't want to wind up with an employee who owes $750,000 to the IRS and can't pay it.
Consulting with a qualified attorney will be invaluable in structuring this transaction in order to avoid this sort of problem. With a valuation of $25-$30 million, you really must seek legal counsel in this matter before moving forward. With that much money on the line, you really can't afford NOT to have a good attorney on your side when you are putting together this deal.
Note: I am not a licensed attorney and this is not legal advice. Please seek the advice of qualified legal counsel.