Many different organizations, businesses, individuals use ESOPs (Employee Stock Ownership Plans) such as:YoungPeople+red doors

Business Owners & Employee Ownership

Unions & Employee Ownership

Employee Groups Buying Their Companies

Sustainable Businesses, Employee Ownership & Cooperatives

Various Advantages to Employee/Owners

  • Opportunity to share in company’s growth and build capital
  • Deferral and reduction of taxes
  • Stock can be received at no risk or expense
  • ESOP can save jobs
  • Dividend income

Advantages to C Corporation Seller

  • Tax deduction up to 25% of payroll to repay stock purchase loan principal +
  • Unlimited tax deduction for payment of reasonable interest on ESOP loan +
  • Dividends tax deductible – if paid in cash, used to pay stock purchase debt, reinvested by participant +
  • Tax on capital gains postponed indefinitely through rollover (for Subchapter “C” Company) to an ESOP or Eligible Worker Owned Cooperative.
  • Solution for business succession & provides market for closely held stock
  • Increased cash flow and working capital
  • Majority control can be maintained
  • Greater productivity and motivation from employee owners

Advantages to Majority ESOP of Sub S Election

  • ESOP exempt from tax on its portion of Company income
  • Income grows tax free in ESOP & is only taxed to participants upon distribution
  • ESOP may distribute benefits in cash, not stock
  • No dissolution of S corp. due to ESOP distribution
  • 100% ESOP owned S corporation pays no federal income tax