
Ask HN: Best legal form for contracting at startup and receive stock options? - tinbad
Working full time for big corp in California and have offer for part time contracting gig at local early stage seed funded startup. They want to pay me hourly and give me stock options. I can&#x27;t seem to find anything about it online but would setting up an LLC be a good way to offer these contracting services and, more importantly, can the LLC be used as a vehicle to hold stock (options) in said company? I know it&#x27;s quite common in my home country (Netherlands) for the LLC equivalent to be able to hold stock in other entities.<p>If the startup takes off after 6 months or so I plan to leave job at big corp and join full time but would like to use the LLC in the meantime as opposed to signing personally.
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brudgers
I am not a lawyer. Even worse, this is random internet advice.

There is clear guidance and precedent for investors and employees - founders
are best thought of as early employees of a C-corp.

Stock options for a contractor are likely to be a legal and tax quagmire on
both sides. I suspect it to be symptomatic of a lack of experience and sound
advice.

From your standpoint. Contractors get paid and that's what seed stage funding
is for. The value of any stock options you received would be dependent on the
goodwill of those who control the company several years down the road. If
there's actually good will now, then additional options can be granted if and
when you are hired as an employee.

That the company cannot hire you now suggests that it is underfunded or
understaffed with technical people or both.

Keep in mind that stock options are not stock. They have no value unless
exercised. Granting options to an LLC would compound the quagmire (if
quagmires can be compounded).

Good luck.

