Finance

A Guide to Employee Share Schemes

Employee share schemes are a cost-effective and superb way to motivate your team and are being launched increasingly by several companies of all sizes and shapes. SMEs and start-ups could encounter difficulties to attract and retain key hires.

What is meant by an employee share scheme?

An employee share scheme is a great way to share company ownership with your team. Under this, you could reward one or more than one key person with equity or all of your staff members. That’s totally up to you.

You could even distribute shares to non-employees as well, like advisors and consultants, though at times, it is perfect to run various types of schemes for external and internal people. Deciding whom to offer equity is only the beginning. Figuring out the right kind of scheme and know more about employee share scheme CGT for your specific needs, is the area where things get often complicated. If you need complete information and any assistance on the employee share scheme, contact Mosaic Tax Legal in Sydney.

Here are some important reasons why you must launch an employee share scheme:

  • For attracting the best talent – To hire is difficult; offering equity to fresh employees is one of the ways to get top talent into your business. You could even level the field of playing by offsetting salary for equity purposes. This allows you for putting together a package of compensation for people which improves or matches on offers that are made by other well-established companies having deeper pockets.

 

  • Increase performance & productivity – According to studies, employees who are even shareholders work much better, as they feel responsible directly for their company value. This motivates them to perform at their best and even take better responsibility for the co-workers’ performance. A larger number of productive employees means not only good work culture but also fewer turnovers but even higher output, decreased cost in relation to looking for talent to keep them, and increased business revenue.

 

  • Relieve the pressure of cash flow – Equity is mostly used for raising finance, but there is even a flipside, as the FDs/CFOs savvier founders understand: equity could even be used for reducing the requirement for finance. Instead of exhausting cash resources for paying people large bonuses and top rates, then why not incentivize them via options or shares? If it is done correctly by reputed and experienced companies like Mosaic Tax Legal, the tax benefits are much more attractive, rather than giving people an annual salary, or bonus. And this means you could preserve your bank balance as well.

 

  • Increase in your business values overall – The employee share scheme results in a happier, stronger team that works much harder, and that is more committed emotionally to the business. And this would most likely add up to some great additional business value.

If you want to know more about employee share scheme CGT in Sydney, contact Mosaic Tax Legal. Their team helps lawyers, accountants, and end clients across several industries dealing with a wide variety of tax problems, related to their investments, business, and transactions.

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