Go EO for Business Owners
Own a company, but love the idea of employee ownership?
Depending on your main goals, there’s a few options
Exit plan
You want to sell up. Potentially you’ll continue to work there, but it won’t be “your” company anymore.
Incentivise Staff
You’ll still control the company, but want senior staff to buy in, giving them “skin in the game”.
Both
You want to sell up whilst also ensuring key staff are incentivised to make it work.
This is where the Employee Ownership Trust (EOT) is a great option.
It’s a form of “indirect” share ownership. As the trust, not individual employees, buys the shares.
The EOT needs to buy a controlling stake to secure the main tax perks, which include zero CGT payable by you plus tax free future profit share payments for employees.
Exit Plan
Incentivise Key Staff
Here you should consider Enterprise Management Incentive (EMI) share options.
There are size limits, and some trades don’t qualify. But if you meet the criteria and want to incentivise key staff, EMI is a great option!
If you don’t qualify, Company Share Option Plan (CSOP) are almost as good. Less restrictive criteria, but less generous tax perks.
A downside to 100% EOT ownership is nobody individually has much to lose if it goes badly.
“Errr…isn’t that a good thing?”
Yes and no. Business will be tough sometimes. Things will go wrong. Customers/suppliers will be difficult. Tools will break. Staff will fall out.
If you’re “just” an employee, you apply for other jobs, get one, and the issues aren’t your problem anymore. If several key people do this, the business is quickly in trouble.
When people own shares directly, they lose out if the business collapses. Hence why it can be popular to combine indirect ownership for the many (EOT) with direct share ownership for the more critical few (EMI/similar).
Both
Want to find out more about the key people behind Go EO?