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Business Financing
(ESOPs, loan structuring)
An Employee Stock
Ownership Plan (ESOP) has many uses and can serve as a form of
retirement plan in which the employer’s company stock is held for the
benefit of the employees. This gives the employees an ownership
interest in their company. It is thought that this ownership interest
may encourage employees to seek to improve the company through
operational innovation and conscientious care about the image and
reputation of the company. In improving the company, the employees are
increasing the value of their own ESOP stock ownership interest. An
ESOP is a trust and employees are the beneficiaries. The employees
cannot access their ESOP until their interests have vested and they are
entitled to a disbursement.
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The creation of an ESOP can have significant
advantages for both the company and the
employees. The ESOP may allow a tax
advantage for the company in the form of tax
deductions for company contributions. It
can encourage employees to strive to improve
the company, above and beyond their duties
as employees. Employees will not need to
pay taxes on the ESOP contributions until
the employee receives a distribution from
the ESOP. This occurs after the employee
has left the company, passed away, become
disabled, or retired.
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ESOPs can provide an excellent solution for a company which wants to
reward employees, build employee loyalty, and instill a sense of
employee personal pride in the appearance, management, and operation of
a business.
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If your company is considering an
ESOP, The Burton Law Firm can help
structure the plan and your company
to accommodate the ESOP.
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