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Do I need a 409A valuation before granting stock options?

Funding, runway & startup metrics

Yes, in practice. The strike price has to be at least fair market value, and an independent valuation gives you safe harbour.

Without it, the IRS can treat the grant as underpriced and tax the employee on the difference, with penalties. Get the valuation before the first grant rather than after.

We handle this for founders running US companies.

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Check your EIN confirmation letter (CP 575) first. If that is gone, look at a previously filed tax return, a business bank account application, or any 1099 you have issued. Your bank or your payroll provider will also have it on file.

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