How an ESOP Helps You Offer Employees a Distinctive Qualified Retirement Plan

The competition to attract and retain the best talent possible is fierce and global — in every industry, and for businesses of all sizes.

Companies need to consider every angle to recruit and retain employees. 

Compensation is always an important consideration, and attractive retirement benefit plans are an important part of any competitive compensation package.

That’s just one more way an ESOP can help lend businesses a competitive advantage: An ESOP is a qualified retirement plan.

Number Six - Benefit of Selling your Company to an ESOP










Benefit #6 of selling to an ESOP: It preserves the company's legacy and values in the local community by creating wealth and sustainable employment through employee ownership. ESOPs reward employees by providing them with an ownership stake in the company they work for and help build. It allows the transfer of ownership to employees at no cost and provide employee ownership without the need for employees to have or raise capital. In some cases, an ESOP can be an attractive succession option for family-owned businesses. 

Did you know? Employee-owned companies are 235% better at job retention. (NCEO)  

Additional key tax benefit;  The portion of a company owned by an S Corporation ESOP is not subject to. federal or state income taxation, increasing cash flow and providing the company with a competitive advantage. This means that S Corporations that are 100% ESOP-owned are not subject to any federal or state income taxes, increasing cash flow and providing the company with a competitive advantage. 

Is An ESOP Right For Your Company

Check out this brief animated video to learn more about ESOPs. 

Number Five - Benefit of Selling your Company to an ESOP










Benefit #5 of selling to an ESOP: It improves company performance by aligning the financial objectives of the company and employees and establishing an ownership culture. ESOPs reward employees by providing them with an ownership stake in the company they work for and help build. It allows the transfer of ownership to employees at no cost and provide employee ownership without the need for employees to have or raise capital. Building an ownership culture by combining meaningful employee ownership and participative management creates a greater sense of pride for the employees, increased engagement and a competitive advantage for a company. Did you know? Employee-owned companies are 235% better at job retention. (Source: NCEO, 2018)  

Additional key tax benefit;  The portion of a company owned by an S Corporation ESOP is not subject to. federal or state income taxation, increasing cash flow and providing the company with a competitive advantage. This means that S Corporations that are 100% ESOP-owned are not subject to any federal or state income taxes, increasing cash flow and providing the company with a competitive advantage. 

Is An ESOP Right For Your Company

Check out this brief animated video to learn more about ESOPs. 

Number Four - Benefit of Selling your Company to an ESOP







 



Benefit #4 of selling to an ESOP: It provides employee ownership as an additional employee benefit to help recruit and retain employees. ESOPs reward employees by providing them with an ownership stake in the company they work for and help build. It allows the transfer of ownership to employees at no cost and provide employee ownership without the need for employees to have or raise capital. Building an ownership culture by combining meaningful employee ownership and participative management creates a greater sense of pride for the employees, increased engagement and a competitive advantage for a company. Did you know? Employee-owned companies are 235% better at job retention. (Source: NCEO, 2018)  

Additional key tax benefit;  The portion of a company owned by an S Corporation ESOP is not subject to. federal or state income taxation, increasing cash flow and providing the company with a competitive advantage. This means that S Corporations that are 100% ESOP-owned are not subject to any federal or state income taxes, increasing cash flow and providing the company with a competitive advantage. 

Is An ESOP Right For Your Company

Check out this brief animated video to learn more about ESOPs. 

Number Three - Benefit of Selling your Company to an ESOP







 



Benefit #3 of selling to an ESOP: The 25% of eligible compensation tax deduction provides the funding for the ESOP transaction expenses.  An ESOP is one of the most cash and tax-efficient succession plans available to business owners. The ESOP trust is an S Corporation shareholder that is a tax-exempt entity not subject to income taxes. S corporations are pass-through entities that pass through their corporate income to their shareholders for federal and state income tax reporting purposes. Each year the shareholders receive an IRS Form K-1 and report the flow-through of the income on their personal tax returns based on their individual federal and state income tax rates.

Note; The portion of a company owned by an S Corporation ESOP is not subject to federal or state income taxation, increasing cash flow and providing the company with a competitive advantage. This means that S Corporations that are 100% ESOP-owned are not subject to any federal or state income taxes, increasing cash flow and providing the company with a competitive advantage. 

Is An ESOP Right For Your Company

Check out this brief animated video to learn more about ESOPs. 

Number Two - Benefit of Selling your Company to an ESOP





 

 

 

 

Benefit #2 of selling to an ESOP: The annual company tax and cash flow savings are greater than the annual ESOP expenses.  An ESOP is one of the most cash and tax-efficient succession plans available to business owners. The ESOP trust is an S Corporation shareholder that is a tax-exempt entity not subject to income taxes. S corporations are pass-through entities that pass through their corporate income to their shareholders for federal and state income tax reporting purposes. Each year the shareholders receive an IRS Form K-1 and report the flow-through of the income on their personal tax returns based on their individual federal and state income tax rates.

The portion of a company owned by an S Corporation ESOP is not subject to federal or state income taxation, increasing cash flow and providing the company with a competitive advantage. This means that S Corporations that are 100% ESOP-owned are not subject to any federal or state income taxes, increasing cash flow and providing the company with a competitive advantage. 

Is An ESOP Right For Your Company

Check out this brief animated video to learn more about ESOPs. 

Number One - Benefit of Selling your Company to an ESOP





 

 

 

 

Benefit #1 of selling to an ESOP: The sale of the company to the ESOP is being paid for by the company tax and cash flow savings over time.  An ESOP is one of the most cash and tax-efficient succession plans available to business owners. 

The portion of a company owned by an S Corporation ESOP is not subject to federal or state income taxation, increasing cash flow and providing the company with a competitive advantage. This means that S Corporations that are 100% ESOP-owned are not subject to any federal or state income taxes, increasing cash flow and providing the company with a competitive advantage. 

Is An ESOP Right For Your Company

Check out this brief animated video to learn more about ESOPs. 

10 Traits of an Effective Executive Sponsor

During times of change, senior leaders play a key role as an executive sponsor. According to Prosci’s,  Best Practices in Change Management – 2018 Edition, the greatest contributor to a successful change initiative is “active and visible executive sponsorship”.

An executive sponsor is typically a C-Suite leader who oversees a business unit and is responsible for meeting project deadlines. They oversee projects and keep them aligned with the organization's strategy and direction.

During an ESOP implementation and ongoing support and buy-in, the role of the executive sponsor sets the tone for how employee-ownership is embraced in the organization. 

Tie Culture to Performance Management

Building an ownership culture begins with defining and communicating organizational purpose and values, tying them to your performance management process, and rewarding employees for their contributions. Building a People Strategy around your ideal culture will generate change.

Part 2 of a 3-part series

Keep Your ESOP On Track and On Time
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