Pro Tip: Equity Compensation

Business owners often want to give some sort of equity compensation to their most vital staff members. While this is a wonderful sentiment, there are considerations before you take that step:

1. Corporate Structure – this can impact the way in which an equity interest can be bestowed

2. Tax implications for the current owner, the company and the employee

3. Future implications for things like profits distributions, decision making process and succession planning

4. Legal for the transaction and operating agreement moving forward

Using equity compensation can be a valuable tool, if done well.

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