- Stockholders can sell all or a part of their
company stock to the ESOP without losing control of the business.
- ESOP shareholders pay no federal and state
(in most states) income taxes on their ESOP stock dividends.
- S corporation shareholders are exempt from
income taxes on corporate earnings (dividends) to the extent of their ESOP
ownership, i.e., a S Corporation that is wholly owned by an ESOP pays zero
federal income tax; S corporation shareholders that own 80% of company stock
in an ESOP pay income taxes on 20% of corporate earnings (dividends); etc.
- Company can borrow from a bank or other
commercial lender for expansion or other corporate projects and have a tax
write off of both principal and interest on the loan.
- Create a meaningful retirement plan.
- Proven motivator for employees to be more
productive workers because of being employee owners - ESOP shareholders.
- Owners can perpetuate the business into
the hands of "key" employees or family.
- Can acquire another company with pre-tax
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