ESOPs can be used by business owners for a variety of reasons, including to:
- Provide a tax-deductible and flexible in-house market for the acquisition of company stock from existing stockholders
- Borrow money for the stock purchase and repay the entire loan with pre-tax dollars
- Provide a controlled financial and management transition plan for your business
- Provide stockholders with a creative way to diversify their net worth that is invested in company stock
- Decrease your company’s income tax liability, thereby enhancing its cash flow for continued growth and debt reduction
- Provide a means for employees to acquire a beneficial interest in the company that will attract, retain, motivate, and reward them
