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Business transitions sometimes take a somewhat non-traditional path. One of those paths less taken would be an Employee Stock Ownership Plan (ESOP). RINA works with several clients that have adopted an ESOP but we wanted to focus on a particular long term client to help guide them through the more difficult portions of adopting and administering their ESOP.
It is somewhat unusual for business owners to decide to turn over their company to the employees but that is what these particular owners have done. Once that decision was made, there were some hurdles to clear regarding planning, valuations, annual administration, census reports, cash flow, income tax effects, etc. that required some fairly complicated planning.
This is made a little more complicated if the business is operating as an S corporation as this one was. However, as complicated as this may be, there are many tax benefits that should be considered and the savings can more than offset the additional complexity.