Incentive compensation in the form of equity-based pay packages can not only help business owners recruit and retain staff competitively in the marketplace, it can also help to ensure employees get personally invested in the company. But with many kinds of programs available, including stock options, phantom stock plans, employee profit sharing plans and deferred profit sharing plans, it’s important to carefully consider which plan optimizes your tax obligations, while helping achieve your business goals.
If you’re simply looking for tax efficiency, a traditional stock option plan may be the most attractive choice. This type of plan gives your employees the chance to invest in your company’s shares at a given price.
Ana-Luiza Georgescu is a partner of KPMG’s tax practice in Montreal.