If you give shares, employees have to pay taxes on those shares. In the case of an 83b, employees pay all tax upfront which is good because that is supposedly t

If you give shares, employees have to pay taxes on those shares. In the case of an 83b, employees pay all tax upfront which is good because that is supposedly the lowest value the shares will be worth so the taxes will be low too. However it is possible that the tax burden is still high depending on the value of the shares and number of shares. Options are generally better for employees because they are not forced into paying more tax. The exception is in the very early stage where shares are basically worth nothing so the tax is basically zero. Also remember that employees cannot sell shares at will if it is a private company, they need board approval. For the company, there isn't much difference either way as far as I am aware.