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Originally Posted by Table 5
Thanks for the feedback guys.
For me, this is more of a bonus situation, not something that's in lieu of regular payment. I still charge pretty much my regular rate (maybe a little less), and the equity portion is more of a bonus. So even if the company doesn't go anywhere, I typically have 90% of my usual fee anyway.
I guess I'm just trying to see what the most ideal position is for someone to have. I usually come in at an early stage (since I do identity/branding/naming), so there probably is typically the option to negotiate for something more ideal...I just don't know what that is. In California, where a lot of my clients are, this stuff is pretty common, but Im just not as familiar with the terminology and what means what.
That makes sense. Do you have an idea of what the tax implications are? if you get say 5% ownership, and there's a certain value attached to it, does that mean you have to pay taxes right away, or only when there's some sort of profit made?
What Im trying to avoid is having to pay taxes before there's actually any sort of money in my pocket, because obviously you never know if it will arrive.
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Honestly, you'd have to give an accountant/book keeper a call. I worked for company that did employee stock plan administration in the past and there is a whole slew of "equity" plans out there, tax deferred, dividend payouts, options, stocks, RSU's, vested, unvested, etc.
Basically the short version is that no two companies are the same, and no two stock holders are the same. Some companies even offered plans where the employees would have the option of paying tax immediately or doing tax deferred payout and only paying tax on income collected.
The rules regulating public VS private companies also varied quite a bit.