Search
Go to the myStockOptions.com homepageTrack your stock options, restricted stock, and SARsCalculators and modeling toolsBookmark your favorite contentView and manage your client list
Tax Center Global Tax Newsletter Glossary Discussion About MSO Home Sign In Register Visit our Tax Center Prevent Tax Mistakes! Visit our Tax Center

Job Events: Consultants and Contractors

Articles   (Jump to FAQs)

Negotiating And Structuring Your Stock Compensation (Part 2): Private Companies  This is premium content

Alisa J. Baker
NEW! Part 1 looked at the problems of conflicting or inconsistent provisions among different documents. Part 2 discusses which existing documents and rules nonfounder executives must consider when negotiating for equity compensation during the early (pre-public) stages of a company's development and growth.

Return to top of this page



FAQs   (Jump to articles)

Can consultants or independent contractors be granted stock options or company stock? How common is this practice? 

Private companies sometimes partly use stock options (NQSOs, not ISOs) or stock grants, along with or instead of cash, to compensate consultants and independent contractors (separate from grants that public and private companies make to nonemployee directors). The terms of these grants can be...

What happens to my stock options if I switch from employee to consultant?  This is premium content

Some grant agreements or plans provide that the options are...

Are there any rules of thumb for how many options consultants should receive on a project?  This is premium content

No. Just as with employee grants, company grant practices for consultants vary widely even within a...

Are the tax rules and withholding for NQSOs different if I am an independent contractor, consultant, or outside director and not an employee?  This is premium content

In some ways they are similar, though different if you were an employee at the time of grant. The tax treatment of NQSOs is...

Are the tax rules for restricted stock different if I am an independent contractor, a consultant, or an outside director and not an employee?  This is premium content

In some ways they are similar. The tax treatment of restricted stock is the same for everyone. The reporting and withholding income is different. If you are an employee...

Can independent contractors, consultants, or outside directors be granted ISOs?  This is premium content

Under the Internal Revenue Code, incentive stock options (ISOs)...

Do the terms in option grant agreements to consultants differ from the terms in employee grant agreements?  This is premium content

At a glance, you may not be able to distinguish a company's stock option grant to an employee from a grant to a consultant...

What are the special issues with options granted to consultants that I need to consider in negotiating my agreement with the company?  This is premium content

The five most significant issues for consultants are...

Are consultant stock options subject to vesting schedules?  This is premium content

Usually, yes. In most instances, consultants are expected to render services over a period or to complete a project...

How does the vesting of stock options for consultants and contractors differ from the vesting of grants to employees?  This is premium content

Almost all grants to W-2 employees base vesting on...

How do I know whether I am still "consulting" or "rendering services" for purposes of vesting and exercisability of options?  This is premium content

This determination involves a close reading of any consulting and grant agreements. If the parties have not...

When my consulting project ends, what should I do to ensure that I get my options or stock? How do I prevent losing my options?  This is premium content

Before completing your project, check the terms of your grant agreement and the company's stock-option plan...

I just heard that the company I did consulting work for is about to go public or be acquired. What should I do about my options or stock?  This is premium content

Generally, no action is necessary if you already...

Do securities laws and regulations place restrictions on stock options or shares granted to consultants and on their freedom to sell the stock?  This is premium content

Yes. A consultant to a private company needs to find out whether the options or shares...

I may leave my company to become a consultant, retire, or take another job. Will taxes still be withheld on my NQSOs, SARs, and/or restricted stock as they were when I was an employee? What if I live in another state when I exercise them?  This is premium content

Most companies base withholding on your employment status at the time of grant, even if...

Can a consultant use the proceeds from an NQSO exercise or restricted stock vesting to fund a Keogh or SEP?  This is premium content

As long as the NQSOs and restricted stock generate ordinary income, you can...

Do advisory-board members usually receive stock options? Does this bear disadvantages for companies?  This is premium content

Many pre-IPO companies establish advisory boards consisting of members who know the company's industry and advise...

I am a consultant. If I have stock options in a pre-IPO company, do I have the right to receive financial statements or shareholder reports?  This is premium content

As with optionholders who are employees, you are not a stockholder of the company until you...

Can a private company contractually restrict my ability to resell my shares, or do the securities laws limit my ability to resell them?  This is premium content

Most private companies make shareholders obey contractual and securities law restrictions on transfer. The most common limitations are...

Return to top of FAQs    Return to top of page

Annotated diagram of Schedule DTax errors can be costly! Don't draw unwanted attention from the IRS. Our Tax Center explains and illustrates the tax rules for sales of company stock, W-2s, withholding, estimated taxes, AMT, and more.

Featured FAQs
Are the tax rules for restricted stock different if I am an independent contractor, a consultant, or an outside director and not an employee? This is premium content
In some ways they are similar. The tax treatment of restricted stock is the same for everyone. The reporting and withholding income is different. If you are an employee...
According to surveys, how are unvested stock options most commonly treated upon various types of termination? This is premium content
In its 2004 Stock Plan Design And Administration Survey, the National Association of Stock Plan Professionals found that the following treatments of options at termination are prevalent...