Thursday, May 3, 2012

Paying Bills with Company Stock

http://tinyurl.com/6mx75r3 is a good article with good advice.  It may sound like a new thing, trust me it isn't new at all.  I remember way back when, I was working on a project, just about the only project for our company that was making any money and when the money got tight, some of the other employees took shares instead of pay.  They didn't offer that to me because my project was too important to the company, which was fine with me at the time.   Only problem a few short years later when there was a merger and IPO, those employees that took stock instead of pay became wealthy and because I didn't I missed out....hmmmm.

It is also a common practice for "Advisers" especially in startups to take "Convertible Notes" as compensation for their consulting advice. 

The article talks only about actual stock and not convertible notes or warrants.  I think this is a mistake, and although the article is correct in every way, it isn't complete.

For example giving stock and taxes.  He is right that giving stock as compensation is taxable and needs to be considered, giving convertible notes is not the same thing.  A Convertible Note is a promise to pay, like a loan repayment, not taxable until it is paid.  See a tax attorney and don't take my advice as legal counsel...;-) 

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