I'm about to be offered equity by my employer. What should I expect?
In my experience, any kind of equity you may be offered by the company is just a carrot. Your offer may be written in such a way that your potential ownership represents, say, 1% of the company today. But if the company goes for a round of financing your ownership percentage can get diluted. If this happens a couple of times and the terms of financing aren't very favorable then your percentage can go from that 1% down to 0.001%, making the equity worthless. I've known people who heard their company was being bought and thought they might get some kind of payoff. Come to find out the company hadn't done all that well and there wasn't anything to pay out after the main investors got some money back. (The main investors took a loss.) For obvious reasons, management wasn't keeping the staff up to date about the fact that they were operating in the red and their options were worthless. Some people grumbled about lawyers and filing lawsuits, but at the end of the day, there wasn't any money to be won. Keep this in mind. As to your question regarding what to look out for: Yes, what they said. You don't mention where you are on the totem pole. Are you reporting to the top dog, or are you 3 levels down? Not to be a downer, but until you know your cut, I'd not get too excited either way. 1000 shares/options of a LinkedIn turned to nearly $100K. Nothing to sneeze at, to be sure, but not enough to retire, nor bother contacting a lawyer.  The details of the equity should be spelled out clearly, nothing against Lawyers, but it's likely to be wasted money. "The main thing is the percentage of the company represented by the shares. Number of shares is meaningless without total shares. If you compute percentage and total company value you can estimate the value of the grant. Or perhaps more useful for a startup is to multiple the percentage by some plausible ""exit"" value, such as how much the company might sell for or IPO for. Many grants expire when or soon after you leave the company if you don't ""cash out"" vested shares when you leave, this is standard, but do remember it when you leave.  The other major thing is vesting. In the tech industry, vesting 1/4 after a year and then the rest quarterly over 3 more years is most common."
That's what i was afraid of. If I did decide to double major it is going to be extremely difficult to keep my grades up all while juggling a job, so it's something I have to think about.  After speaking to IB I'll see if it is for me. If not I was thinking about hedge fund or private equity. Guess we'll see. What other certifications should I keep in mind?  Thank you for all your advice! There are several things being mixed up in the questions being asked. The expense ratio charged by the mutual fund is built into the NAV per share of the fund, and you do not see the charge explicitly  mentioned as a deduction  on your 401k statement (or in the statement received from the mutual fund in a non-401k situation). The expense ratio is listed in the fund's prospectus, and should also have been made available to you in the literature about the new 401k plan that your employer is setting up. Mutual fund fees (for things like having a small balance, or for that matter, sales charges if any of the funds in the 401k are load funds, God forbid) are different. Some load mutual funds waive  the sales charge load for 401k participants, while some may not. Actually, it all depends on how hard the employer negotiates with the 401k administration company who handles all the paperwork and the mutual fund company with which the 401k administration company negotiates.  (In the 1980s, Fidelity Magellan (3% sales load) was a hot fund, but my employer managed to get it as an option in our plan with no sales load: it helped that my employer was large and could twist arms more easily than a mom-and-pop outfit or Solo 401k plan could). A long long time ago in a galaxy far far away, my first ever IRA contribution of $2000 into a  no-load mutual fund resulted in a $25 annual maintenance fee, but the law allowed the payment of this fee separately from the $2000 if the IRA owner wished to do so. (If not, the $25 would reduce the IRA balance (and no, this did  not count as a premature distribution from the IRA). Plan expenses are what the 401k administration company charges the employer for running the plan (and these expenses are not necessarily peanuts; a 401k plan is not something that needs just a spreadsheet -- there is lots of other paperwork that the employee never gets to see). In some cases, the employer pays the entire expense as a cost of doing business; in other cases, part is paid by the employer and the rest is passed on to the employees.  As far as I know, there is no mechanism for the employee to pay these expenses outside the 401k plan (that is, these expenses are (visibly) deducted from the 401k plan balance). Finally, with regard to the question asked: how are plan fees divided among the investment options? I don't believe that anyone other than the 401k plan administrator or the employer can answer this. Even if the employer simply adopts one of the pre-packaged plans offered by a big 401k administrator (many brokerages and mutual fund companies offer these), the exact numbers depend on which pre-packaged plan has been chosen. (I do think the answers the OP has received are rubbish). "I got a BA in Econ from a mid-tier public school in CA, and I graduated near the trough of the great recession, so my experience may not represent what current and future graduates can expect. It took a couple of years of shit-jobs, but I eventually got into banking (a matter of who-you-know) and after almost 5 years I couldn't stand it anymore so I am starting my MS in Econ at an also mid-tier public CA school. I can't compare to CS, and my advice will differ from robolib's:  1. Never assume that jobs will we thrown at you, especially a job that you actually want, like, and will make a career. The job market is strong and you ought to be able to get an entry level analyst position if you can show you have strong econometrics. Many schools require you to do a research paper for your senior seminar (instead of a graduation exam) I recommend to choose a topic with good data available.  2. All the government jobs I've looked at required at least a Master's. That said, the ROI on a Phd is rarely worth it if you have to take on debt to do it. You MIGHT be able to get your foot in the door with a Bachelor's but you won't be able to progress up the job ladder. I suggest being a little more open-minded about potential employers, there are way more options when you consider consulting or business development for larger corporations.  3. Economics majors make the most out of the social scientists by far, last I checked it was 60-80k (depending on local market, obv.) but I imagine that trails CS majors significantly. You should be able to afford a decent standard of living in either field, so certainly consider more on the basis of what kind of work you get the most satisfaction from.  4. With an undergrad degree you will start in local government. You may then be able to jump to State and then Federal levels after 5-10 years experience, but still may find it difficult if you forgo the Master's. I have not personally worked as an ""economist"" but I do know you will spend a lot of time searching for/collecting data, writing or using statistical analysis programs to process it, and writing up your reports.  5. Go search ""analyst"" on Indeed.com and you'll find myriad positions in everything from finance, to marketing, to supply chain, etc. which ask for degrees in business, finance, ""or other related field (economics).""  In my opinion, the prestige of the university from which you graduate is secondary to the work you do.  Assuming you do a research paper, if it is kick-ass it won't matter much if you went to Harvard or not. Check your city/county jobs site for internship opportunities since no matter what, even getting an entry level job can be difficult if you've never had any job experience in the field (or related field).  Labor economics is big since there's a lot of good data and it is a hot topic. Personally, I'm focusing on urban economics, real estate, planning, and transportation. The beauty of Econ is that it is so broad you can almost do whatever you want. But the drawback is that it is so broad it can be tough to show employers that you possess the specific skills and knowledge that make you desirable.  Hope this helps!" "The part that I find confusing is the loan/stock hybridization.  Why would the investor be entitled to a 30% share if he's also expecting to be getting paid back in full? This is the part that's making me scratch my head.  I can understand giving equity and buying out later.  I can understand giving equity with no expectation of loan repayment.  I can understand loan repayment without equity.  I can even understand collateralizing the loan with equity.  I can not understand how ""zeroing out"" the loan still leaves him with a claim on 30% of the equity. Would this be more of a good will gesture as a way to thank the investor for taking a chance?  Please forgive any naivety in my questions." Founder makes available 100% equity, but uses a reasonable amount of the proceeds to pay him/herself a salary (or wage) and from that salary invests in the same initial offering to acquire shares for him/herself.   I see several problems.   What is a reasonable salary?   Also, this leaves the door open to the following scam:  Founders say that they are going to follow this plan.  However, instead of buying shares, they simply quit after being paid the salary.  They use knowledge gained from this business to start a competitor.  Investors are left holding an empty company.   Tax consequences.  The founder would pay income tax on the salary.  By contrast, if the founder instead sells shares, that would be capital gains tax, which is lower in many countries (e.g. the United States).   Why would I want to invest in a business where the founders don't believe in it enough to take a significant equity stake?   Consider the Amazon.com example.  Jeff Bezos makes a minimal salary, around $80,000 a year, less than many of his employees.  But he has a substantial ownership position.  If the company doesn't make money, he won't.  Would investors really value the stocks with a P/E of 232.10 in 2016 if they didn't trust him to make the right long term decisions?   It's also worth noting that most initial public offerings (IPOs) are not made when the founder is the only employee.  A single employee company instead looks for private investors, often called angel investors.  Companies generally don't go public until they are established in some way, often making money.  Negotiating with angel investors is different from negotiating with the public.  They can personally review the books and once invested tend to have input on how the money is spent.   In other words, this is mostly solving the wrong problem if you talk about IPOs.  This might make more sense with a crowdfunded venture, as that replaces a few angel investors with many individuals.  But most crowdfunded ventures tend to approach things from the opposite direction.  Instead of looking for investors, they look for customers.  If they offer a useful product, they will get customers.  If not, they never get the money.   Beyond all this, if a founder is only going to get a fair salary some of the time, then why put in any sweat equity?  This works fine if the company looks valuable after a year.  What if it doesn't?  The founder is out a year of sweat equity and has nothing in return.  That happens now too, but the possibility of the big return offsets it.  You're taking out the big return.   I don't think that this is good for either founders or investors.  The founder trades a potentially good or even great return for a mediocre return.  The investors trade a situation where both they and the founder benefit from a successful company to one where they benefit a lot more than the founder.  That's not good for either side. "I'm not the OP, but I'm happy to give a brief overview.  Basically, pre-JOBS act there were a lot of limits on who could make an equity investment in a non-public company (i.e. a startup or even a hedge fund). There were some loopholes, but basically you had to be an 'accredited investor'. An accredited investor was someone who either has made $200,000+ ($300,000+ for married people) for the past two years and expects to make that much again in the current year. Alternately, they could have a net worth of $1 million, excluding the value of their primary residence. There was also a limit of 500 investors for a non-public company before the company had to become public (they didn't really have to IPO, but they did have to file their financials with the SEC, so the effect was basically the same). Finally, non-public companies were prohibited from seeking investment through advertising basically. They couldn't take out an ad in a paper or event send a mass email and say, ""Hey, we're looking to raise a $1 million funding round, contact us if you're interested!""  Okay, now after the JOBS Act.  The JOBS Act changed a) the number and type of investors who could make equity investments in a non-public company b) the regulation of advertising for investments.  Post-JOBS private companies could have 2,000 shareholders and 500 of those could be unaccredited (e.g. regular people like you and I). The change in the number of shareholders isn't really that important because it's just shareholders of record, but that's another post for another day. There are still some requirements for unaccredited shareholder, which I don't remember off the top of my head. I think you have to have income of at least $40k. They also changed the solicitation ban, so it's possible that you might see an ad in the WSJ someday for a startup company, venture capital fund, hedge fund, etc.  There are some other things it changed, but IMO those are the two most important." First, determine the workload he will expect.  Will you have to quit your other work, either for time or for competition?  How much of your current business will be subsumed into his business, if any?  Make sure to understand what he wants from you.  If you make an agreement, set it in writing and set some clear expectations about what will happen to your business (e.g. it continues and is not part of your association with the client).  Because he was a client for your current business, it can blur the lines. Second, if you join him, make sure there is a business entity.  By working together for profit, you will have already formed a partnership for tax purposes.  Best to get an entity, both for the legal protection and also for the clarity of law and accounting.  LLCs are simplest for small ventures; C corps are useful if you have lots of early losses and owners that can't use them personally, or if you want to be properly formed for easy consumption by a strategic.  Most VCs and super-angels prefer everybody be a straight C.  Again, remember to define, as necessary, what you are contributing to be an owner and what you are retaining (your original business, which for simplicity may already be in an entity).  As part of this process, make sure he defines the cap table and any outstanding loans.  Auntie June and Cousin Steve might think their gifts to him were loans or equity purchases; best to clear this issue up early before there's any more money in it. Third, with regard to price, that is an intensely variable question.  It matters what the cap table looks like, how early you are, how much work he's already done, how much work remains to be done, and how much it will pay off.  Also, if you do it, expect to be diluted by other employees, angels, VCs, other investors, strategics, and so on.  Luckily, more investors usually indicates a growing pie, so the dilution may not be at all painful.  But it should still be on your horizon.  You also need to consider your faith in your prospective partner's ability to run the business and to be a trustworthy partner (so you don't get Zuckerberg'd), and to market the business and the product to customers and investors. If you don't like the prospects, then opt for cash.  If you like the business but want to hedge, ask for compensation plus equity.  There are other tricks you could use to get out early, like forced redemption, but they probably wouldn't help either because it'd sour your relationship or the first VC or knowledgeable angel to come along will want you to relinquish that sort of right. It probably comes down to a basic question of your need for cash, his willingness to let you pursue outside work (hopefully high) and your appraisal of the business' prospects. I'm not sure 1099-MISC is what you should expect. Equity means ownership, and in LLC context it means membership. As an LLC member, you'll get distributions and should receive a K-1 form for tax treatment, not 1099 or W2. If the CEO is talking about 1099 it means he's going to hire you as a contractor which contradicts the statement about equity allocation. That's an entirely different situation. 1) Specifically, would the 1099-MISC form be used in this case? 1099-MISC is used to describe various payments. Depending on which box is filled, the tax treatment may be as of employment income (subject to SE taxes) or passive income (royalties, rents, etc - subject to various limitations in the tax code). 3) If this is the only logical method of compensation (receiving a % of real estate sales), how would it be taxed? That would probably be a commission and taxed as employment income. I suggest to get a professional tax adviser consultation on this issue, with specific details, numbers, and kinds of deals involved. You can get gain or lose a lot of money just because you're characterized as a contractor and not LLC member or employee (each has its own benefits and disadvantages, and you have to consider them all). 4) Are there any advantages/disadvantages to acquiring and selling   properties through the company as opposed to receiving a % of sales? Yes. There are advantages and there are disadvantages. For example, if you're using a corporation, you can get salary, if you're a contractor you cannot. There are a lot of issues hidden in this distinction (which I've just discussed with KeithS in this argument).