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Business Professionals

Advantages of Employee Ownership

Invest in Your Employees
and Your Business with an ESOP

As of 2022, the National Center for Employee Ownership (NCEO) estimates  roughly 6,500 ESOPs covering almost 14 million participants.

 ESOP Rollout

The goal in rolling out your ESOP is to help your employees understand the ‘why’ behind the ownership transition, create trust and transparency in the conversion, and align the next steps in the lifecycle of the ESOP.

With our assistance, you can


  •  Communicate questions your staff may have during the ESOP transition

  • Establish an ESOP strategy for your announcement and rollout

  • Identify best practices to include in the first phase of employee ESOP education

  • Partner with executive leadership and administrative talent to identify 12-month ESOP goals

 ESOP Administration

The in-house ESOP administration functions will become a daily responsibility for your organization. With our assistance, you can


  •  Coach leadership on future administrative and operating policies

  • Determine best practices in human resources information systems/payroll for annual census reporting

  •  Develop best practices for your administrative lead on managing and preparing for your qualified plan audit(s), ESOP, and 401k, if applicable 

  • Establish annual timeline in conjunction with other benefit administration responsibilities

  • Identify best practices and rollout for delivering annual employee statements 

  • Mentor ESOP administrative lead and leadership team on the annual administration cycle

Workforce Planning & Advancement

While one of the benefits of the ESOP is nothing changes, it is also an invitation to think in new and creative ways. Research shows informed, interested, and involved employees increase company performance. With our assistance, you can​:

  •  Consider opportunities and action plans to measure employee engagement

  • Determine opportunities to educate, recognize, and celebrate staff

  • Establish your ESOP communications team and meeting rhythms

  • Identify financial literacy learning opportunities for your staff

  • Provide opportunities for staff to understand how company decisions and financials impact their role, daily operations, and business objectives

  •  Select mediums to provide cascading communications with staff

 ESOP Tax Services

ESOPs offer substantial tax benefits to business owners and their companies. We take the following into account:


  • Ensure tax minimization strategies are explored and implemented promptly through regular meetings with your finance team

  • Consult with management throughout the year to ensure the proper treatment of transaction items, including the annual yearend financial and tax physical

  •  Emphasize optimal tax minimization strategies for federal, state, and local taxes while meeting compliance obligations

  • Optimize future investments and exit strategies with a proper tax and business structure

  • Take into account a volatile tax landscape with long-term tax planning

  • Determine research and development credits, including Employee Retention Credits

  •  Research cost-segregation tax benefits

  • Consider accelerated depreciation, including Section 179

  • Look at outside services or subcontractors, including worker classification

  • Identify potential tax implications of shareholder loans and IRS risks to ensure proper documentation.

 Workforce Planning & Advancement

Your ESOP will take center stage in aligning your employees to your company’s business plan. The workforce planning process will be the foundation for talent acquisition and employee development to develop high-functioning and productive employees. With our help, you can:

  •  Determine rewards and recognition programs to support your workforce

  • Develop branding and marketing strategies to attract and retain candidates and staff

  • Identify people development strategies and talent needs to aid the growth of the company

  • Reinforce your development of recruiting and selection strategies

ESOP Tax Advantages

  • Capital gain on the sale of shares of a C-Corporation to an ESOP may be deferred by the selling owner as long as, among other requirements, the ESOP owns 30% or more of the corporation’s shares after the transaction and the selling owner invests the sale proceeds in the qualified replacement property. »

  • The percentage of profits of an S-Corporation owned by an ESOP is not subject to federal (and possibly state) income tax because ESOPs are income tax exempt. »

  • Contributions by the company to the ESOP (including contributions used by the ESOP to pay principal and interest on a loan) are considered contributions to a tax-qualified employee benefit plan and are tax deductible within certain limits. »

  • Dividends paid on stock held by the ESOP are tax-deductible to a C-Corporation (but not an S-Corporation) if distributed to ESOP participants or are used to pay principal and interest on a loan.

  • There are estate and charitable gifting planning opportunities for the selling owner.

  • Employees receive tax-deferred retirement benefits, eligible for tax-free rollover upon distribution from the ESOP.

Ongoing Support for ESOP Ownership

Congratulations on your Employee Stock Ownership Plan. Berman Hopkins developed our Support for ESOP Ownership services due to experience with other clients that needed guidance after the transaction through the implementation phase. If desired, Berman Hopkins can be a resource in providing these possible services that might be helpful as your company moves into the compliance requirements of becoming an ESOP company:


  • ESOP communication presentation/ explanation of ESOP to company employees

  •  ESOP accounting for initial transactions

  • Banking related to ESOP issues - line of credit/ bank account, etc.

  •  Support related to ESOP trustee »

  • Fiduciary insurance - trustee/board

  • Confirm independent appraiser and timing of the valuation

  •  Support company in retaining a third-party administration

  • Advice related to Board of Directors

  • Assist with IRS determination letter annual audit support

  • Consultation with the auditor’s CPA regarding transactional accounting

  •  Banking related to ESOP issues – line of credit/bank account

  •  ESOP accounting issues related to transactions 

  • ESOP accounting ongoing classification

  • ESOP accounting contra equity account

  •  ESOP tax planning » ESOP accounting compensation expense


  • ESOP accounting for continuing contributions »

  • Support for share release calculations

  •  Accounting for compensation expense »

  • Management of benefit levels »

  • Consulting on IRS and DOL Compliance

  •  Audit and bank compliance support »

  • Support for participant reporting



  •  Accounting for changes in loan agreements 

  • Diversification requirements

  •  Assistance with policy updates 

  • Repurchase liability planning

  •  Maintaining proper corporate records

  •  Repurchase liability planning 

  • Consulting related to managing movement of shares after distributions (recycle vs. releverage considerations)

When we say experts, we mean experts.

Below is a list of accredited affiliations and associations our audit team work with on a regular basis.

AICPA-Employee Benefit Plan Audit Quality Center
Florida Insitute of Certified Public Accountants
Association of Certified Fraud Examiners
National Association of Certified Valuators and Analysts
The ESOP Association
National Center for Employee Ownership
Phillip Hayes, The ESOP Guy

Journey to an ESOP:

In “The Journey to an ESOP,” Partner, Phillip Hayes addresses ESOPs from a business owner’s perspective.

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