Options vs stock - I'm doing contract work for some startups, and they are asking me if I want stock options, or just stock. I assume I want stock options right? (I don't pay tax up front, so no risk if they end up not being worth anything). Is there something I'm overlooking here?
Yeah, it depends on whether the stock options will be taxed as ordinary income when you exercise them. Ordinary income will be taxed at 30-50%, while long term capital gains will be taxed at 19%. Also, will they give you more if it's options or the same amount? I'd go for the stock if I believe in the company.
- Kevin Fox
But bear in mind that most startups fail, so going on you should presume the options are most likely to be worthless.
- Stephen Mack