If you are a start up or a new business and need a number of employees to fill immediate positions, but you don’t have the liquid capital to pay them, offering stock options is a great way to fuel growth and jumpstart your company’s success. Stock options can be just as good as cash and when your company starts bringing in bigger investors or goes public, your employees can cash in and all their hard work and diligence won’t be completely in vain. In a few industries, especially the tech industry, offering stock options in the form of payment is de rigueur. In addition, for new businesses that don’t have a lot of start up capital, stock options are a great way to supplement an employee’s salary in order to keep them motivated and on board. Here are some things you should know before you offer your employees stock options.

Giving you employees will make them minority owners in the company before it goes public, which could give them a huge incentive to work harder to accomplish certain goals. In some cases, giving your employees stock options could be worth more than cash value, provided that they work hard enough. It might be smart to speak with your accountant to find out what kind of stock options you can give to your employees so that when your company does go public you don’t find out that your employees are actually majority stock holders. The SEC has different types of classifications that are given to each stock, and some are worth more than others.

For a new company, offering stock options is a great way to recruit a star team. Many talented employees won’t work for free, especially if they were paid a large salary at their previous job, so giving them stock options is an excellent way to retain them. Moreover, if a talented employee rejects a certain salary or bonus increase, you can always ask if their payment can be supplemented with a high classification of pre-IPO stock, which can actually be worth a lot when your company goes public.

One of the downsides to offering your employees stock options is that it puts a lot of pressure on the company to succeed. This can be especially true if employees are relying on your company for a retirement fund. In essence, offering your employees stock options creates a culture of negative competition and lack of diversification. Anybody that has taken stock market courses knows that it is important to diversify and not put all your eggs in one basket. So, it is important that employers teach their employees that the stock in your company isn’t the end all be all.

Lastly, offering your employees stock options is a great way to get your business to the stop with a qualified and talented team. Offering valuable employees stocks, either with a nominal annual or month salary or without, will keep them on board and motivated to reach your company’s fiscal goals until it is time to go public. For many start ups and new companies, offering stock options might be the only way to get people to work for them, so ask your account what some of your options might be.