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From Pennsylvania Center for Employee Ownership (PCEO)
Millionaire grocery clerks, real retirement savings, tax free companies. Crazy? No…it’s called employee ownership.
What if your employer (or you, as a small business owner) could sell you a percentage of their/your company? What if you paid NOTHING for the shares, but now had real retirement funds? And what if the company became more productive and was exempt from federal and state tax on profits?
This is all possible through an ESOP, an “Employee Stock Ownership Plan.” In 1974, the federal government created a program that allows owners of businesses to sell some or all of their company to their employees.
The employees pay nothing. Rather, the business takes on a note (a “mortgage”) that gets paid back over three to five years.
The owner gets paid full fair market value, and now the employees have a real stake in the company and real retirement savings. Not surprisingly, employee owned companies are much more productive than non-employee owned companies and turnover rates decrease dramatically.
And here’s the best part – an ESOP company’s profits are tax free – forever. The tax savings pay off the mortgage! Yet, very few people know about this.
Pennsylvania has about 300 ESOPs including well known companies such as Sheetz and Wawa, and locally, Columbia Montour Chamber member Larson Design Group. Read what some CEOs have to say about employee ownership.
At age 19 Cathy Burch took a job at WinCo, a supermarket chain and ESOP company. She worked in various roles – cashier, shelf stocker, inventory orderer, and by the time she was 42, she was a millionaire. At WinCo, her story is not unique. Read more about the millionaire grocery clerks.