Articles Tagged with California corporate lawyers

AdobeStock_419006596-300x200Equity compensation is an important tool employers use to attract – and retain – talented employees. Before you begin offering stock options, it is important to consider the amount of stock being issued to employees and how issuing it could affect the value of your business. There are many ways to structure an equity compensation package. Consult with a California startup lawyer to structure compensation packages that are best for your business, your future funding rounds, your shareholders, and your employees.

Before issuing any equity compensation, it is important to understand how this will affect the value of your business. Many businesses consider stock options as an inexpensive part of a compensation package. There is no accounting cost and no cash outlay required, so stock options might seem like an attractive option. There is even an added tax benefit: the difference between the stock price and the exercise price is a tax deduction to the business. But the National Bureau of Economic Research reports that this perception does not form an accurate picture of the actual economic cost of stock options. Understand the long-term costs of stock options – and how they will affect the valuation of your business over its lifetime – before making any decisions about how many employees will be awarded what amount of stock options.

The Total Percentage of Your Employee Stock Options

AdobeStock_224157473-300x200Convertible notes are a popular method used by startup companies to raise capital for a new business. There are, however, different types of convertible notes, and it is important for new business owners to understand the pros and cons of each. It is also critical that business owners understand the long-term consequences of convertible notes on their future business operations and financing.

Maturity Date

SAFE (a Simple Agreement for Future Equity) is a convertible note in which an investor converts his or her investment into equity in the company. With a SAFE agreement, the investment converts to equity at any future equity financing. There is no maturity date. Thus, the investor could convert the debt to equity the very next day if an applicable equity financing is completed. KISS is a different type of convertible equity that may or may not have a maturity date.