A significant aspect of making certain your company stays compliant with all tax laws are 409a valuations. Business owners who plan on offering stock options to their employees will find that a 409a is one of, if not their only, option. They are considered “safe harbor” stock options as they are non-taxable. However, the process of 409a valuation can be complex and if done incorrectly runs the risk of being challenged by the IRS or SEC. Working with an expert in tax valuation adds a layer of protection and takes the pressure off of business owners, so they can focus on supporting their employees.
All business owners have to balance tax compliance while also providing lucrative incentives to their valued employees. One of the many ways to do this is through Employee Stock Ownership Plans (ESOP). However, as with everything related to taxes, the valuation, occurring before or while offering stock options to your employees, brings with it the possibility of being audited. Obtaining a business valuation from a professional valuation team, as you create stock option plans, can make the process considerably less complex. It can clarify what kinds of tiers or the level of buy-in you can offer your employees, as well as help you format plans and policies for their futures and yours.