Do I need a 409A valuation?

  • Finance

Most private companies that issue stock options or other equity-based compensation need a 409A valuation to remain compliant with U.S. tax rules. If your company grants options, restricted stock, or other deferred compensation tied to equity, a valuation is required to establish fair market value. Without it, employees and contractors may face immediate taxation and penalties. Even early-stage startups typically need a 409A before issuing initial option grants. A compliant valuation protects both the company and its stakeholders?

R&D Offer Quiz

Step 1 of 3

Answer to find out if you're eligible for R&D tax credits.

Do the activities performed relate to a new or improved business component’s function, performance, reliability, quality, or composition?(Required)
For Example: A mid-sized packaging company develops a slightly modified cardboard box design to improve its stacking strength (reliability) for warehouse storage, involving minor adjustments to the corrugation pattern to reduce collapse under standard weight loads.
Is your company trying to discover information to eliminate uncertainty concerning the capability or method for developing or improving a business component?(Required)
For Example: A furniture manufacturer investigates whether a cheaper wood adhesive can hold joints as effectively as the current one during assembly, testing bond strength to resolve doubts about its capability in standard production lines.
Do the activities performed constitute a process of experimentation?(Required)
For Example: An auto parts supplier runs a series of bench tests on different lubricant formulations to find one that reduces friction in engine bearings more effectively, systematically comparing wear rates over simulated operating cycles.