One of the supposed benefits of working at a startup is the equity you’re offered as part of your compensation package. Given that more often than not this equity is in place of a 401k and a portion of your salary, in theory it may offer great reward in the long run.
However, what I didn’t realize about stock options (ISOs and NSOs) years ago is that in order to actually receive the stock, you still have to pay for it. Options just mean that you are able to buy the stock at a strike price, which is “low” but may very well still be higher than what the stock ends up being worth. Continue reading Startup Stock Options: Taxes and Risk