409A Valuations, Demystified When your startup needs a 409A, what it should cost, and how to stay safe-harbor compliant before granting stock options.

Before granting the first stock options. Granting below fair market value without a valuation can create serious tax penalties for employees.

Up to 12 months, or until a material event — like a priced funding round — makes the old number stale, whichever comes first.

The IRS can presume your strike price was too low; affected employees may owe immediate tax plus a 20% penalty on vested deferrals.