Whatever your goals are in the employee benefits area, an ESOP could be the answer.
ESOPs can be useful to owners of privately-held companies and can create an extremely attractive benefit to its employee group. They can be used to buy out the shares of departing or retiring owners where there isn’t a ready market for their shares or when outside shareholders are not desirable. ESOPs also create unique tax advantages for companies.
Employee ownership can be achieved in a multitude of ways, but the most common vehicle in the United States is through an Employee Stock Ownership Plan (ESOP). Your Alerding CPA Group ESOP experts are prepared to help you navigate this process:
Audit – We can perform your annual compliance audit of your employee-owned or partially-owned ESOP company. ESOP companies have unique reporting and disclosure requirements that most accounting firms are not aware exist. This can create significant deficiencies in your external financial statements and an unwanted visit from the DOL.
Tax Planning – ESOPs can create significant tax planning advantages for the Company and its ownership. These advantages include tax deductions for: cash and stock contributions; contributions to repay loans; and in an “S” corporation no income tax on income earned by the ESOP. We can also help you make the decision to be a subchapter “S” corporation or a “C” corporation.
Recycling vs. Repurchasing – This is one of the most complex decisions in the world of ESOPs. Whether to use the recycling or repurchasing method of accounting when buying back stock from your existing employees. This can be key to creating the desired diversification of stock among employees and the overall results of the plan itself.
Let us help you in your decision- making process or in maintaining and administrating the plan itself.