I was asked by a reader how much equity he should give out to early employees and to service providers in a very early stage startup. I'll get to service providers in a later post. To help with this discussion, let me start with a definition of "early employee."
Original post by Brian Huber of Demand Media A corporation is allowed to take a tax deduction for turning employees into owners of the company when following the rules for either granting shares of stock or awarding options to purchase stock. In both cases, employees are taxed on the value of stock received.
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