How to Make Startup Stock Options a Better Deal for Employees

Options in a startup

They're potentially lucrative, but also complicated and definitely not a sure thing.

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Get the right advice before you make any moves. Instead of getting a big paycheck, a large portion of your compensation will come in the form of stock options.

10 Tips for Dealing with Startup Stock Options

Getting a Pay Raise in ? An initial public offering is a one-time event that could instantly turn you into a millionaire.

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Since the financial crisis, a typical startup waits an average of 10 years before going public, according to a Stanford University report. Internet earnings on binary options the company you work for does well, you could be sitting on some very valuable stock options.

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But how do you turn those prized options into precious cash right now? There are also a growing number of online marketplaces that have lenders and buyers lined up for individuals who wish to exercise some of their options and then sell the underlying shares.

Understanding Startup Stock Options

The longer the company has been in business, the more likely you may be able to cash in. The key is to first understand exactly what you own, and then find out which, if any, of these arrangements your employer may be able to support in order to cash in some of your stock awards.

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Only a financial adviser who specializes in private-company stock options can let you know about all of your choices — and the tax ramifications — before you take action. Selling your shares right now might result in a sudden windfall.

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He says most people wait to meet with him until after they have a liquidity event, such as an IPO, buyout or merger. It can be difficult to research what to do on your own because there are many variations of stock options and equity stakes in startups, and each has its own nuances, vesting schedules and complex tax rules.

  • Understanding Startup Stock Options
  • Work at a Startup September 16, Benjamin Beltzer is an early engineer at Berbix S18a startup building identity verification and fraud deterrence as a service.
  • Because your purchase price stays the same, if the value of the stock goes up, you could make money on the difference.

They may have incentive stock options, non-qualified options, restricted stock units, employee stock purchase plans, or a options in a startup plan, which can all work differently. As an expert in all kinds of stock options, he helps people understand how their options work, the decisions they can make, and the tax consequences and strategies.

It depends on the market.

Working for a Startup: How Well Do You Know Your Employee Stock Options?

The lesson here? Many people who work at startups have too much of their own money tied up in the company and are at a major financial risk if the business ends up having financial problems.

Not only could the stock value fall, but they could also lose their jobs. Your stock options could be your one and only opportunity for a big windfall.

How to value startup stock options when comparing job offers

The right stock compensation adviser can help you understand how to use them to help your finances even if you never experience a payday of this size again. This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. Pam's also the options in a startup and CEO of Wealthramp.