I am the sole shareholder of a california c-corp. I want to give
shares of my corp to employees and non-employees, how do I do that? is
there an online service that can assist me?

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Request for Question Clarification by taxmama-ga on 15 Aug 2004 15:09 PDT

Dear John

Even if there were an online service, don't use it. 

Sit down with an attorney who specializes
in corporate issues and learn what ALL the 
ramifications are in such an action.  And
all the ways to handle such a transaction.

You have legal, tax, and estate issues, at the very least. 

But, good for you - for wanting to share your success with your employees.

Incidentally, you may want to consider giving them non-voting 
preferred stock, with a buy-back clause, just in case things change 
in your relationship. 

Or you may want to consider giving them a profit-sharing
plan instead of stock. They'll still get their share of 
your profits as long as they are there...but if they leave,
you still own your business. 

I always advise small business owners not do 
give away voting control of their business outside
of their families (heck, not even within the family, 
unless the family members work full-time for the 
business).

If you still want to go with the stock, let us know
and I or another researcher will try to help you.


Good luck

Your TaxMama-ga

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Clarification of Question by johnjerabek-ga on 16 Aug 2004 11:29 PDT

Hello,

Thank you very much for your insights, and your kind words. I have set
up profit sharing, but I would like to pursue the ESOP or whatever it
works out to be. How do I get started with finding an attorney,
estimating costs, and such? and how do I make use of your services
while finding my way?

Aah, John, 

You don't want to give shares away - you want an ESOP. 

Now, THAT is smart. 

Better, yet, you are in California. 

I know just the right attorney.
He has set up several ESOPs. One for one of my clients.

Talk to John Balian, Esq.

Here's information about him.
http://www.bbblaw.com/balian.htm 

And since Google doesn't like to have us post
e-mail addresses or contact info (some people are apt
to pick them up for spamming purposes), here's a 
link to John's contact information. 

http://www.bbblaw.com/contact.htm

My clients and I have been working with him for
about 7 years. And while he's not nearly as quick
about returning phone calls as he was then - he's
always does an excellent job - and he always comes through. 

If you need to reach me and want me to work on anything
for you - just put TaxMama in the subject line of your
question. Either I will see it, or someone is bound to 
alert me. 

If you want me to do any more digging on this question, 
please let me know. 

But I think John can take care of estsblishing your ESOP. 

Just in case you want to do some reading - 
the National Center for Employee Ownership 
has some excellent articles and information.
http://www.nceo.org/esops/esop_articles.html

I liked this resource so much that I come back regularly.

Best wishes

TaxMama-ga

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Clarification of Answer by taxmama-ga on 16 Aug 2004 12:46 PDT

Sorry John,

I didn't address your question about how to 
select an attorney - or costs. 

That's a toughie. I rarely shop for price when it 
comes to something like this. Experienced people
are cheaper - while they might cost more per hour
or per project, you don't have to spend a fortune 
to fix their mistakes. 

So, concentrate on searching for experience. 

The NCEO site offers consulting services
http://www.nceo.org/esops/esop_consulting.html


The Securities and Exchange Commission, on their site about ESOPS, 
provides a link to this site for pension attorneys.
http://www.pensionaction.org/npln.htm

Look for attorneys that have already prepared ESOPs.

Ask them for references to clients who may be willing to 
speak to you about their level of satisfaction with the
plan. 

Ask them about their provisions for employees who leave.

Ask them about tax deferral provisions for your own profits.

Ask them about the pitfalls or problems they have encountered.
If someone is willing to tell you about his/her mistakes,
then they're honest - and they've learned from them.

Also, ask them about the administration of the ESOP - who will
do it? What will it cost? How responsive are they? And what's
if you want to change the administrator - how easy is it to 
get control back, of your own ESOP plan?

Once you're satisfied - then, I would run their name in Google 
to see what pops up. 

Best wishes

Your TaxMama-ga