Sweat Equity: How to Value Work for Shares, the UK Tax Trap and Why Vesting Matters
Sweat equity is a stake in a company given in return for work instead of cash. A co-founder, developer, marketer or adviser helps build the business and is paid, in whole or in part, with shares or with the right to buy shares later. It’s how a lot of businesses get built before there’s the money to pay salaries.
Shares given away for work are hard to get back, and every share given away is a share of whatever the business becomes. That’s why a sweat equity deal needs a clear job, an agreed way to value it and vesting, so the shares are earned over time and not handed over…
The skinny
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