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With hopes of a hotter IPO market on the horizon, many private company employees seek to better understand their equity. Two major factors come into play when thinking about equity in startups: how to value it and how the option-related taxes work.
Employees need to understand their equity’s value to confidently exercise or sell, and the related taxes to optimize their profits. Below we will dive into both subjects in a way that makes sense for the everyday startup employee.
How to Value Stock Options
When granted stock options you are given a strike price at which you
