3% Equity options in software company, entitles me to revenue share?
It might, but it also might not. The Board of Directors gets to decide whether and how much dividends are paid to stockholders. So this will vary from company to company and may change over time. I suggest you ask the person making the offer. That said: It looks like they offered you OPTIONS, not Shares. An option is just the right to buy stock at a given price in the future. It is extremely unlikely that you would be entitled to any dividends since you don't have an ownership stake, just a potential to be a shareholder.
"If you are using software like QuickBooks (or even just using spreadsheets or tracking this without software) use two Equity accounts, something like ""Capital Contributions"" and ""Capital Distributions"" When you write a personal check to the company, the money goes into the company's checking account and also increases the Capital Contribution account in accordance with double-entry accounting practices. When the company has enough retained earnings to pay you back, you use the Capital Distributions equity account and just write yourself a check. You can also make general journal entries every year to zero out or balance your two capital accounts with Retained Earnings, which (I think) is an automatically generated Equity account in QuickBooks. If this sounds too complex, you could also just use a single ""Capital Contributions and Distributions"" equity account for your contributions and distributions." "Finance is ALL about obscure theoretical points. This one actually isn't even that obscure, kind of like a big gaping whole that nobody addresses.   So to address your ""minimum cash"" level point. That's what I'm working towards. Check this:  So if you are selling your company, and all of the potential buyers are public companies, you would adjust your working capital balances in your model to match the public company market benchmark (ie: days payable outstanding, days receivable outstanding). This would be some sort of ""added value"" that a public company would bring to the mix.    You should do the same for cash. You would benchmark what level of cash the comparable public companies hold (possibly as a % of revenue?), and apply that as the level of operating cash.   You're counter argument would be that some firms may choose to hold on to excess levels of cash for a period of time (Apple), skewing ""minimum cash levels"" upward. That's true, but over a period of time, investors would either (1). demand the excess cash back or (2) investors would sell shares because the company is not earning a sufficient return on equity. My second point is half baked and not fully thought through but it goes along with the idea that a company will dividend out excess cash if it cannot reach the hurdle rate demanded by investors.  Thank you for continuing the conversation with me, I think you're the only one that gets it." "Share price is based on demand.  Assuming the same amount of shares are made available for trade then stocks with a higher demand will have a higher price.  So say a company has 1000 shares in total and that company needs to raise $100. They decide to sell 100 shares for $1 to raise their $100. If there is demand for 100 shares for at least $1 then they achieve their goal. But if the market decides the shares in this company are only worth 50 cents then the company only raises $50. So where do they get the other $50 they needed? Well one option is to sell another 100 shares. The dilution comes about because in the first scenario the company retains ownership of 900 or 90% of the equity. In the second scenario it retains ownership of only 800 shares or 80% of the equity. The benefit to the company and shareholders of a higher price is basically just math. Any multiple of shares times a higher price means there is more value to owning those shares. Therefore they can sell fewer shares to raise the same amount.  A lot of starts up offer employees shares as part of their remuneration package because cash flow is typically tight when starting a new business. So if you're trying to attract the best and brightest it's easier to offer them shares if they are worth more than those of company with a similar opportunity down the road. Share price can also act as something of a credit score. In that a higher share price ""may"" reflect a more credit worthy company and therefore ""may"" make it easier for that company to obtain credit. All else being equal, it also makes it more expensive for a competitor to take over a company the higher the share price. So it can offer some defensive and offensive advantages. All ceteris paribus of course." "That ain't nothing.  It's really easy to get ""whipped up"" into a sense of entitlement, and forget to be grateful for what you do have.  If this house doesn't exist, what would his costs of housing be elsewhere?  Realistically.  Would landlords rent to him? Would other bankers lend him money to buy a house? Would those costs really be any better?  What about the intangible benefits like not having any landlord hassles or having a good relationship with the neighbors?  It's entirely possible he has a sweet deal here, and just doesn't make enough money.  If your credit rating is poor, your housing options really suck.  Banks won't lend you money for a house unless you have a huge ton of upfront cash.  Most landlords won't rent to you at all, because they are going to automated scoring systems to avoid accusations of racism.  In this day and age, there are lots of ways to make money with a property you own.  In fact, I believe very firmly in Robert Allen's doctrine: Never sell.  That way you avoid the tens of thousands of dollars of overhead costs you bear with every sale. That's pure profit gone up in smoke.  Keep the property forever, keep it working for you.  If he doesn't know how, learn.  To ""get bootstrapped"" he can put it up on AirBnB or other services. Or do ""housemate shares"".  When your house is not show-condition, just be very honest and relatable about the condition.  Don't oversell it, tell them exactly what they're going to get.  People like honesty in the social sharing economy.  And here's the important part: Don't booze away the new income, invest it back into the property to make it a better money-maker - better at AirBnB, better at housemate shares, better as a month-to-month renter. So it's too big - Is there a way to subdivide the unit to make it a better renter or AirBnB?  Can he carve out an ""in-law unit"" that would be a good size for him alone? If he can keep turning the money back into the property like that, he could do alright.  This is what the new sharing economy is all about.  Of course, sister might show up with her hand out, wanting half the revenue since it's half her house.  Tell her hell no, this pays the mortgage and you don't!  She deserves nothing, yet is getting half the equity from those mortgage payments, and that's enough, doggone it!  And if she wants to go to court, get a judge to tell her that.  Not that he's going to sell it, but it's a huge deal. He needs to know how much of his payments on the house are turning into real equity that belongs to him.   ""Owning it on paper"" doesn't mean you own it.  There's a mortgage on it, which means you don't own all of it.  The amount you own is the value of the house minus the mortgage owed.   This is called your equity.   Of course a sale also MINUS the costs of bringing the house up to mandatory code requirements,  MINUS the cost of cosmetically making the house presentable.   But when you actually sell, there's also the 6% Realtors' commission and other closing costs.  This is where the mortgage is more than the house is worth.  This is a dangerous situation.  If you keep the house and keep paying the mortgage all right, that is stable, and can be cheaper than the intense disruption and credit-rating shock of a foreclosure or short sale.  If sister is half owner, she'll get a credit burn also. That may be why she doesn't want to sell.  And that is leverage he has over her.  I imagine a ""Winter's bone"" (great movie) situation where the family is hanging on by a thread and hasn't told the bank the parents died.  That could get very complex especially if the brother/sister are not creditworthy, because that means the bank would simply call the loan and force a sale.   The upside is this won't result in a credit-rating burn or bankruptcy for the children, because they are not owners of the house and children do not inherit parents' debt." I was hesitant to answer this question since I don't own MLP even though I'm aware of how they work.  But hear crickets on this question, so here goes.  I'll try to keep this as non technical as possible. MLPs are partnerships where a shareholder is a partner and liable for the partnership's taxes.  MLPs don't pay corporate tax since the tax burden flows to you, the shareholder. So does that mean like a partnership the partners are liable for the company's actions?  Technically, yes. Has it happened before? No. Of course there are limitations to the liability, but are not definitely shielded in a way normal shareholders are.   MLPs issue a K-1 at the beginning of the year (feb/mar).  The tax calculations are relatively complex and I'm not going to go over that in this post. Generally MLPs are a bad choice for tax-deferred accounts like IRAs since there are tax implications beyond certain limits of distribution (yes even out of an IRA you'll have to pay taxes if above the limit). Not all types of businesses can become MLPs (hey no corporate tax, let's form an MLP!) Only companies engaged in businesses related to real estate, commodities or natural resources can become MLPs.  There are a number of MLPs out there.  The largest is Kinder  Morgan Energy Partners. Hope this helps! "Does your job give you access to ""confidential information"", such that you can only buy or sell shares in the company during certain windows?  Employees with access to company financial data, resource planning databases, or customer databases are often only allowed to trade in company securities (or derivatives thereof) during certain ""windows"" a few days after the company releases its quarterly earnings reports.  Even those windows can be cancelled if a major event is about to be announced.  These windows are designed to prevent the appearance of insider trading, which is a serious crime in the United States. Is there a minimum time that you would need to hold the stock, before you are allowed to sell it?  Do you have confidence that the stock would retain most of its value, long enough that your profits are long-term capital gains instead of short-term capital gains? What happens to your stock if you lose your job, retire, or go to another company? Does your company's stock price seem to be inflated by any of these factors: If any of these nine warning flags are the case, I would think carefully before investing. If I had a basic emergency fund set aside and none of the nine warning flags are present, or if I had a solid emergency fund and the company seemed likely to continue to justify its stock price for several years, I would seriously consider taking full advantage of the stock purchase plan.  I would not invest more money than I could afford to lose. At first, I would cash out my profits quickly (either as quickly as allowed, or as quickly as lets me minimize my capital gains taxes).  I would reinvest in more shares, until I could afford to buy as many shares as the company would allow me to buy at the discount. In the long-run, I would avoid having more than one-third of my net worth in any single investment.  (E.g., company stock, home equity, bonds in general, et cetera.)" "A company has 100,000 shares and 100,000 unexercised call options (company issued). Share price and strike price both at $1. What country is this related to?   I ask because, in the US, most people I know associate a ""call"" option with the instrument that is equivalent to 100 shares.   So 100,000 calls would be 10,000,000 shares, which exceeds the number of shares you're saying the company has.   I don't know if that means you pulled the numbers out of thin air, or whether it means you're thinking of a different type of option? Perhaps you meant incentive stock options meant to be given to employees?  Each one of those is equivalent to a single share.  They just aren't called ""call options"". In the rest of my answer, I'm going to assume you meant stock options. I assume the fact that these options exist will slow any price increases on the underlying shares due to potential dilution? I don't think the company can just create stock options without creating the underlying shares in the first place.  Said another way, a more likely scenario is that company creates 200,000 shares and agrees to float 50% of them while reserving the other 50% as the pool for incentive employee stock.  They then choose to give the employees options on the stock in the incentive pool, rather than outright grants of the stock, for various reasons.  (One of which is being nice to the employees in regards to taxes since there is no US tax due at grant time if the strike price is the current price of the underlying stock.) An alternative scenario when the company shares are liquidly traded is that the company simply plans to buy back shares from the market in order to give employees their shares when options are exercised.  In this case, the company needs the cash on hand, or cash flow to take money from, to buy those shares at current prices. Anyway, in either case, there is no dilution happening WHEN the options get exercised.  Any dilution happened before or at the time the options were created.   Meaning, the total number of shares in the company was already pre-set at an earlier time.  As a result, the fact that the options exist in themselves will not slow price changes on the stock. However, price changes will be impacted by the total float of shares in the company, or the impact to cash flow if the company has to buy shares to redeem its option commitments.   This is almost the same thing you're asking about, but it is technically different as to timing. If this is the case, can this be factored into any option pricing models like black-scholes? You're including the effect just by considering the total float of shares and net profits from cash flow when doing your modelling." You could think of points 1 and 3 combined to be similar to buying shares and selling calls on a part of those shares. $50k is the net of the shares and calls sale (ie without point 3, the investor would pay more for the same stake). Look up convertible debt, and why it's used. It's basically used so that both parties get 'the best of both world's' from equity and debt financing.   Who is he selling his share to in point 2 back to the business or to outside investors?