Growing private companies often issue stock options to their employees to attract the best talent. If you issue these stock options, you could be in danger of incurring unnecessary taxes and penalties from the IRS. In 2005, section 409A was added to the Internal Revenue Code, which regulates deferred compensation and more specifically, the issuance of stock options to employees. The IRS stipulates that companies can avoid inclusion under section 409A by complying with their outlined “safe harbor” methods. The easiest way to do this is by retaining a qualified independent appraiser to value the company’s common stock.
409Areport.com has in-depth experience having performed hundreds of 409A valuations for privately-held companies and startups funded by leading Venture Capital firms such as Kleiner Perkins, Google Ventures, Hummer Windblad, Tomorrow Ventures, Shasta Ventures, Battery Ventures and many others.