--- title: "Stock Options: Set Up An Equity Incentive Plan" id: "435369" type: "products" slug: "stock-options" published_at: "2026-10-09T09:44:29+00:00" modified_at: "2026-10-09T13:25:22+00:00" url: "https://seedlegals.com/us/grow/stock-options/" markdown_url: "https://seedlegals.com/us/grow/stock-options.md" --- # Set up an Equity Incentive Plan ## Your team can be as invested as you are Give them real ownership in what you’re building. Set up your equity incentive plan, get your 409A valuation, grant ISO and NSO options, track vesting and exercise the options – all on SeedLegals. [Start free](https://app.seedlegals.com/signup) [Talk to the team](/us/talk-to-us/) ## Use equity to attract and keep the best people #### Keep your best people invested Equity plans let you make a competitive offer even when cash is tight. Vesting schedules mean your team stays committed for the long haul. #### Grant to anyone on your team Support for both ISOs and NSOs means you can grant to employees, advisors, and contractors, all from the same plan. #### Skip the extra vendor Your 409A valuation is bundled right into your subscription, giving you one less thing to worry about. #### Have it all in one place Grant, track and exercise seamlessly. Plus, our experienced team is always here to help whenever you need it. ###### What are stock options? ## Give your team a stake in the outcome [Stock options](https://seedlegals.com/us/resources/stock-options-for-startups-guide/) give the people who help you build your company a chance to own a piece of it. You grant the option, they earn it over time, and if the company does well, so do they. - Attract and retain top talent you can’t afford to lose - Keep your best people invested for the long haul - Grant, vest, and exercise all in one place ###### ISOs and NSOs ## One platform, every kind of option grant Whether you're granting to employees, bringing on an advisor, or hiring a contractor, we support both ISO and NSO stock options. - Grant ISOs (for US employees) and NSOs (for consultants, advisors, non-US team) from the same Equity Incentive Plan - Each grant is documented correctly for its type, automatically - No guesswork about which option type fits who you're hiring ## Here's how it works - #### Set up your plan Log in to SeedLegals and hit ‘start’ on your Equity Incentive Plan (EIP) workflow. It sets the rules for every option you grant from here on, and reserves the shares for your future option grants. - #### Get your 409A valuation We bundle in a fair market valuation via our trusted 409A valuation partner, so your grants get a defensible strike price without having to find one separately. - #### Create your grants Choose ISO or NSO for each option holder, then create your grants as a batch. We'll handle the board consent and generate all your individual grant documents. - #### Track everything easily As your team vests and exercises their options, it's all reflected in your option holder table automatically, and as options are exercised and become shares, your cap table is automatically updated too. [#!](#!) [#!](#!) ## FAQs Frequently asked questions about Equity Incentive Plans - How do stock options work? A stock option gives someone the right to buy shares in your company at a fixed price (called the strike price) once they've vested. It's a promise of future ownership, not shares themselves. Once someone's options vest, they can choose to exercise them (buy the shares) at the price you set when you granted the option. - What's the difference between an ISO and an NSO? **ISOs** (Incentive Stock Options) are for US employees. They come with a tax advantage: if you hold the shares long enough, gains can qualify for lower long-term capital gains tax instead of ordinary income tax. There are some limits on how much you can give any one person in a year. **NSOs** (Non-qualified Stock Options) are for everyone else (consultants, advisors, and non-US team members ) since ISOs are only available to US employees by law. NSOs don't get the same tax break, but they're more flexible on who can receive them. - How much equity should I give someone? There's no universal formula. It depends on your stage, the role, how early they're joining, and what similar companies are offering. It's one of the hardest calls founders make, and getting it wrong in either direction has real costs. Our team can talk you through how other companies at your stage are approaching it. - What's a vesting schedule, and what's a cliff? Vesting is the timeline over which someone earns their options—commonly 4 years. A cliff is a minimum period (usually 1 year) someone has to stay before any of their options vest at all. So if someone leaves after 6 months, they typically walk away with nothing; after the cliff, they start vesting a portion with each month or year that passes. - Why are option grants often issued in batches? Option grants need to be approved by your board through a single board consent, and every detail (amount, strike price, vesting) has to be locked in before that happens. Because of this, most companies batch grants together (for example, after a round of hiring) rather than issuing one at a time. - What's a 409A valuation, and why do I need one? A 409A valuation sets the fair market value of your company's shares, which is used to set a defensible strike price for your option grants. Without one, you're exposed if the IRS later decides your strike price was set too low. We bundle this in as part of your options subscription, so you're not sourcing it separately. - Do I need a new 409A valuation if I raise a funding round? Usually, yes. A funding round changes your company's valuation, which means your existing 409A no longer reflects a fair strike price. If you want to grant more options after raising, you'll typically need an updated valuation first. **We can get you a discounted price** on your next 409A valuation via our trusted partner. - Does SeedLegals handle the money when someone exercises their options? No, we handle the paperwork and keep your cap table accurate, but the option holder pays their exercise price directly to your company. We're not set up to hold or move funds on your behalf. - Do I need an Equity Incentive Plan before I can grant options? Yes. Your EIP sets the total number of options you're allowed to grant and the rules that govern them. Once it's in place, every grant you make just needs to fit within it. - Can I bring an equity plan I already set up elsewhere onto SeedLegals? Yes. If you've already got an EIP or existing grants set up through a lawyer or another platform, we can bring those across so everything's tracked accurately going forward. - What happens when someone exercises their options? Once an option is vested, the holder can choose to exercise it, meaning they pay the strike price to actually buy the shares. When that happens, it's reflected straight into your cap table, so your ownership records stay accurate automatically. ## You’re in safe hands Our team has helped thousands of entrepreneurs raise money and grow their businesses. - ##### Beautifully organized Your company's core agreements, all in one place - ##### Secure signatures Share and collect signatures online via SeedLegals - ##### Serious about security Your information stays safe and confidential in our secure system - ##### Helpful humans Talk to one of our friendly team anytime on live chat - ##### Extra protection Don't worry, our insurance covers claims related to our platform ## We’ve helped over 60,000 companies From food to fintech, thousands of companies use SeedLegals to start, raise and grow faster. Now in the U.S.! - - SeedLegals held our hand through complex investor negotiations and even picked up on some errors produced by our previous lawyers which were a well-known City law firm! ##### Alex Templeton Founder & CEO, Qured -