ESOP Feasibility

An ESOP is a unique liquidity and exit strategy for owners of engineering and architecture firms seeking to diversify wealth, maintain control and perpetuate their legacy.

Who determines the value of company stock in the ESOP?

Valuation of company stock in the ESOP must be made by an independent appraiser annually, and any time the ESOP purchases company stock from the company or an employee, officer, director, or 10% or greater shareholder. The DOL and IRS have issued guidance on the factors that must be taken into account when appraising a…

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What costs are involved in establishing and maintaining an ESOP?

Costs are a function of the complexity of the transaction. If owners take the time to get a better understanding of ESOPs, initial costs can be reduced. Ongoing ESOP administrative expenses are similar to most profit sharing plans, with the exception of the annual valuation update needed to value company stock held in the ESOP.

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Can an S corporation set up an ESOP?

Yes. Effective January 1, 1998 it became advantageous for an ESOP to be a shareholder of an S corporation under the federal tax laws. To the extent that the S corporation is owned by an ESOP, no federal income taxes on corporate income are payable by either the shareholder or the company.

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Business Succession Planning for Engineers & Architects

An Employee Stock Ownership Plan is a unique liquidity and exit strategy for owners of engineering and architecture firms seeking to diversify wealth, maintain control and perpetuate their legacy. Learn what an ESOP is and if its appropriate for you, tax incentives for C and S corporations and…

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ESOPs: A Business Succession Planning Tool Worth Considering

An ESOP is a powerful business succession plan. It provides a means for a business owner to transfer ownership of a company to his or her employees while still retaining some control and value in the business.

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Business Succession Planning and the ESOP Alternative

An Employee Stock Ownership Plan or ESOP, is a tax-qualified retirement plan that invests primarily in employer stock, writes Jim Steiker. However, ESOPs offer much more than just employee benefits. To owners of closely held contractor firms, an ESOP can be used as a tool of corporate finance.

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Business Succession Planning & ESOPs

An employee stock ownership plan (ESOP) may make sense for some dealers and other aftermarket retailers looking to build a succession plan they can control while protecting wealth, diversifying assets and deferring taxes. Is an ESOP right for your company? Use our ESOP self-assessment tool to find out.

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Are ESOPs Really More Complex Than Other Ways to Sell a Business?

This table from The National Center for Employee Ownership (NCEO) compares the complexity, risks, and flexibility of selling a closely held company to an ESOP compared to selling to a third party.

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8 ESOP Myths Debunked

When considering employee benefit and owner succession plan alternatives, business owners often overlook the possibility of an ESOP: an Employee Stock Ownership Plan. In an ESOP, the company establishes a trust which invests primarily or completely in the stock of the company. Employees become vested in this stock, giving them an ownership and financial interest…

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4 Signs That You May Be Ready to Plan for Your Business Transition, Part 2

Successful business owners are unique in their abilities to manage many aspects of their companies, all towards a successful, profitable outcome. In the day-to-day battles and pursuits to advance your company, it is unlikely that you stop to think about its future transition. Despite the fact that you may not be pro-actively thinking about the…

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4 Signs That You May be Ready to Plan for Your Business Transition, Part 1

Successful business owners are unique in their abilities to manage many aspects of their companies, all towards a successful, profitable outcome. In the day-to-day battles and pursuits to advance your company, it is unlikely that you stop to think about its future transition. Despite the fact that you may not be pro-actively thinking about the…

Read More