10 Things to Know About 409A Valuation
Published by Founders Circle
Stock options have long been a way for startups to incentivize and retain employees. But issuing them brings with it regulatory requirements.
In the wake of the Enron accounting scandal in 2001, the government started requiring companies to properly value stock options they grant employees. Enshrined as section 409A of the tax code, the rule means that startups need to regularly undergo audits to establish the value of the common shares it hands out as options to its employees.
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