Employees of many businesses are getting benefits from ESOP – employee stock ownership plan, to take an ownership interest in the businesses. Owners of the companies are establishing the stock ownership plan for their employees to provide them with various benefits along with ownership interest. In addition, this plan is also benefiting the company owners in getting a lot of great tax benefits. When the employees buy the plan from the owners, they actually borrow funds to get a contribution from the company. Further, the employees use these funds to purchase a share in the business. A large number of business owners are transferring full or partial ownership of the company to their employees to enjoy the long-lasting benefits.

The business owners are also establishing an employee stock ownership plan as a retirement benefit for their employees after creating an ESOP plan to showcase the structure and policies. In addition, under ESOP, the business owners are also appointing a trustee or committee to oversee the plan. And they are transferring full/partial ownership of the companies to employees with either voting or nonvoting shares. By this, the owners are keeping control of the company in their hands until the ESOP leads to buying all of the shares.

Primarily, small businesses are establishing ESOP for their employees because they are generating more benefits from the program as compared to the big businesses. The small or medium-sized business owners are making contributions to the plan each year which are tax-deductible, up to 25% of the company’s payroll. Once the plan owns 100% of the business, then the business enjoys exempt from corporate income taxes.