I own a service business id like to look at converting from an LLC to an employee owned or shared ownership stucture. Without saying too much yet I was thinking something set up like WinCo Foods in the western US. I have a corporate attorney but not a tax attorney. The only other LLC member is my sister. Who does not have an accounting degree but has 20 years experiance with corporations like Sketchers, Black & White Market and Kay Jewlers. I work in a field it is hard to get quality workers and was thinking of how to get great employees to actually dig deep and know their efforts help build their future as well. Im happy to answer any questions. Thank you in advance.
Answers
Contact SCORE - Service Corps of Retired Executives. They have Retired Corporate Executives who coach younger people on running businesses and they do it at very low cost or for free.
I think it's free if you're an American Citizen. So please check them out. Let me know how it goes. I believe they've got locations all over the USA.
Best, June R Massoud
You need an excellent attorney with considerable expertise. Also, you need to determine if you would like to separate ownership and control, which may be achieved through two different classes of stock.
Employee ownership sounds great, but there are a lot of challenges. Make sure that you review the worst case scenarios and that you are comfortable with the risks. I would recommend reviewing alternatives, such as profit-sharing, prior to settling on employee ownership.
You need an excellent attorney with considerable expertise. Also, you need to determine if you would like to separate ownership and control, which may be achieved through two different classes of stock.
Employee ownership sounds great, but there are a lot of challenges. Make sure that you review the worst case scenarios and that you are comfortable with the risks. I would recommend reviewing alternatives, such as profit-sharing, prior to settling on employee ownership.
You need an excellent attorney with considerable expertise. Also, you need to determine if you would like to separate ownership and control, which may be achieved through two different classes of stock.
Employee ownership sounds great, but there are a lot of challenges. Make sure that you review the worst case scenarios and that you are comfortable with the risks. I would recommend reviewing alternatives, such as profit-sharing, prior to settling on employee ownership.
You need an excellent attorney with considerable expertise. Also, you need to determine if you would like to separate ownership and control, which may be achieved through two different classes of stock.
Employee ownership sounds great, but there are a lot of challenges. Make sure that you review the worst case scenarios and that you are comfortable with the risks. I would recommend reviewing alternatives, such as profit-sharing, prior to settling on employee ownership.
I would reach out to your local chamber of commerce they have retired business execs at some of the larger ones that could assist you or direct you to the right source.
As a former CEO of a non-profit owned by non-profits I would agree with the answer above keep it simple. We had freeze our pension due to extremely high costs, and started a Simple IRA for each employee of the % we used to put in their pension, no one wanted to handle it, as of course for only 40 employees it was chump change to start with. KISS is a great principal, and a good accountant combined with an attorney will be on your list of needs. Good luck
I would reach out to your local chamber of commerce they have retired business execs at some of the larger ones that could assist you or direct you to the right source.
As a former CEO of a non-profit owned by non-profits I would agree with the answer above keep it simple. We had freeze our pension due to extremely high costs, and started a Simple IRA for each employee of the % we used to put in their pension, no one wanted to handle it, as of course for only 40 employees it was chump change to start with. KISS is a great principal, and a good accountant combined with an attorney will be on your list of needs. Good luck
This is a rather complex issue. First, take a look at BING.com topic "employee owned business". You will find a lot of info there.
A major decision factor is whether you have accumulated value in your business and you are looking for a tax advantage. If so, you'll need to consult a good tax lawyer about an Employee Owned Stock Ownership Plan (ESOP).
If tax deferral is not your motivation and you want to "keep it simple", there is nothing stopping you from continuing the LLC form and selling shares to employees. But there lurks the question of determining the value of those shares, tax implications of the sale at other than fair value (that tax lawyer looms large) and then the ultimate question of control (you v. employees) and what happens when an employee leaves.
Remember that you can achieve much that is desirable by implementing a bonus plan that rewards key employees in good years and does not dilute your control or create new problems where none existed previously. Keep it Simple is a good guideline!!
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