In the News

  • 03 Nov 2014 4:49 PM | Claire Armsgtrong (Administrator)



    Santoro & Sinnamon

    Certified Public Accountants

    51 Mill Street

    Wolfeboro NH 03894


    Understanding Stock Options

    Stock options received from a corporation can be a complicated topic.  This article is a simplified summary version to provide a basic understanding of how stock options work when offered by an employer to an employee.


    Corporate stock and partnership interests can be offered to employees in a variety of ways.  An employer can grant shares of stock to an employee or can grants rights to an employee to buy shares of stock.   Each option has its own tax consequences to the employee and the employer. This article will be addressing the later, where an employer grants rights to an employee to buy shares of stock.  The grant of rights can be down one of two ways: “Incentive Stock Options” or “Nonqualified Stock Options”.


    Incentive stock options are a right to buy equity in the corporation at a certain price.  A corporation issues an option to purchase stock at a price which is usually equal to (but never less than) the fair market value of the stock on the date the option is granted.  The employee then exercises the option to purchase the shares at the specified price at a future date in time.  Once the option is exercised, the employee then sells the stock at a future date, hopefully at a gain.  The employee pays a capital gain tax on any gain generated between the sale price of the stock and the purchase at the exercised option price.


    Nonqualified stock options are also a right to buy equity in a corporation but they do not meet all the requirements of incentive stock options. In this case the corporation usually grants an option to purchase stock at a price that is lower than the fair market value of the stock.  When the employee exercises the option to purchase the stock at their granted option price, they have taxable income to the extent that the fair market value of the stock exceeds the option price (also known as the strike price).  This income is usually included in the employees W2 and taxed at their ordinary income tax rate.  The employee then can sell the stock and then receives a capital gain or loss on the difference between the fair market value of the stock on date of purchase vs the fair market value on date of sale.  Typically the stock is sold immediately after purchase and there very little gain or loss to recognize on the sale.



    There a significant amount of rules and regulations surrounding stock options.  I recommend any employee being offered options to purchase employer stock consult a tax advisor to assist in understanding the tax consequences of the transaction.



    This article has been provided to give you a general overview, you should always consult a tax advisor as individual circumstances may vary. Should you have any questions, please contact Lorena Sinnamon, CPA, at Santoro & Sinnamon Certified Public Accountants at one of our locations: Commerce Corner Building, 43 South Road, Suite 200, Deerfield, NH 03037 or Bayside Village Building, 51 Mill Street, Wolfeboro NH 03894 1-800-220-5521,, or visit us at and sign up for our newsletter.

  • 23 Aug 2014 6:31 PM | Claire Armsgtrong (Administrator)






    Accessing capital is a major challenge for today’s small business owners. It’s an even bigger task for small business owners who have less-than-perfect credit. Although there are more options available now than ever before to find capital to improve business growth and create jobs, the price tag of some loan products needs to be completely understood before a business owner signs that application. Not every small business owner can afford the price tag of some of this financing. As well, the more traditional bank loan takes an absorbent amount of time get through, even when it’s backed by the SBA. However, it’s a tough decision for small business owners to bank local, or veer away from the shop local theme.

    We’ve compiled a little bit of information to help you get over that hurdle in obtaining cash to continue building your business. If you have the time, patience and credit, check with your bank’s branch manager about obtaining a small business loan.  Be prepared for a lengthy application process, possible application fees, and personal collateral to back your loan, if approved. 

    The SBA is another place to check for information in obtaining a loan.  SBA provides a number of financial assistance programs for small businesses that have been specifically designed to meet key financing needs, including debt financing, surety bonds, and equity financing. While they do not fund or service the loan, they will back the loan in the event of default. SBA sets the guidelines for loans, which are then made by its partners (lenders, community development organizations, and microlending institutions). SBA-guaranteed loans may not be made to a small business if the borrower has access to other financing on reasonable terms.  Check with your banks branch manager to see if they are an SBA partnering institution.  Again, be prepared for a lengthy application process, realistic and drawn out business plan, and possible application fees.  Typically, the lending institution will process a UCC filing with the state to claiming an interest into your business property should you default. 

    Another option, which is my personal favorite, is an online small business lender called OnDeck Capital.  OnDeck  is a company that makes loans to small businesses. You can find them online at The company lists five requirements that are put forth for easy viewing, and requests minimal, if any, documentation that has to be submitted.  Typically the whole application process takes less than 10 minutes, as well; you will get a decision in minutes and funding as quickly as 24 hours.  There is a 2.5% loan origination fee, but the time and aggravation of applying for the more traditional loan may be well worth that amount.  Don’t worry about paying the monthly bill; they take a daily payment amount from your business account each day of the week, excluding weekends and holidays.  There are several other online small business lenders out there worth taking a look at as well.

    In all, every business has different requirements and expectations for their lenders.  Some may still enjoy the time spent refreshing the business plan, and having lunch with the branch manager then waiting a couple of weeks for a decision, while others enjoy the new, online style of doing business that frees up their time and gives them a quick answer and funding alike.  Hence,  just another business decision to be made. Click the links above to see what works best for you.

    Written by: Mark Desrochers, Jambs Jewelry

    Raymond, NH

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