- Original Poster
- #1
Hopefully this is the right forum for the question.
Last year and a bit I've started doing freelance on the side after my main job. For half of it I've been dealing with the same client who is a private ltd start-up.
Instead of continuing the paid freelancing with them, I have been offered 1% equity into the start-up for the role of an advisor. The vesting schedule is 48 months. The expectation is for me to provide 5 hours of my time each week for the advisory role (software dev). The 5 hours commitment is unpaid. The contract states I will be treated as an independent contractor rather than an employee. From what I understand I'll be getting options to buy stock rather than stock units (the agreement states "you will be granted an option to purchase X shares of the Company’s common stock (the “Option”). The exercise price per share of the Option will be determined by the Board when the Option is granted.")
Now this is all new to me (shares/stocks/equity always confused me), so I was hoping to get some insight from the community.
First question - is this a normal kind of arrangement? Especially given the fact the 5 hours commitment on my part is not paid in cash, but from my understanding the equity is my compensation?
Should I ask to be paid for the 5 hours, or is the whole idea of equity vesting to provide services based on future compensation when selling the shares if that becomes a possibility?
Are there any financial risks? I've got a full time job and mainly doing freelancing on the side, so I'm not relying solely on the equity investment. But I was wondering if there were any potential financial aspects to be aware of, especially when it comes to tax. For example could there be a situation where I have to substantial money (either tax or other obligations).
I've also noticed the company status on company house recently says "dissolved", but I don't know what that means in terms of equity investment.
Sorry some questions might be silly, but this is quite new to me.
Thanks
Last year and a bit I've started doing freelance on the side after my main job. For half of it I've been dealing with the same client who is a private ltd start-up.
Instead of continuing the paid freelancing with them, I have been offered 1% equity into the start-up for the role of an advisor. The vesting schedule is 48 months. The expectation is for me to provide 5 hours of my time each week for the advisory role (software dev). The 5 hours commitment is unpaid. The contract states I will be treated as an independent contractor rather than an employee. From what I understand I'll be getting options to buy stock rather than stock units (the agreement states "you will be granted an option to purchase X shares of the Company’s common stock (the “Option”). The exercise price per share of the Option will be determined by the Board when the Option is granted.")
Now this is all new to me (shares/stocks/equity always confused me), so I was hoping to get some insight from the community.
First question - is this a normal kind of arrangement? Especially given the fact the 5 hours commitment on my part is not paid in cash, but from my understanding the equity is my compensation?
Should I ask to be paid for the 5 hours, or is the whole idea of equity vesting to provide services based on future compensation when selling the shares if that becomes a possibility?
Are there any financial risks? I've got a full time job and mainly doing freelancing on the side, so I'm not relying solely on the equity investment. But I was wondering if there were any potential financial aspects to be aware of, especially when it comes to tax. For example could there be a situation where I have to substantial money (either tax or other obligations).
I've also noticed the company status on company house recently says "dissolved", but I don't know what that means in terms of equity investment.
Sorry some questions might be silly, but this is quite new to me.
Thanks
R
