Developing a profit sharing program can mean benefits for you, your business and your employees. It provides an incentive for your staff to save, enhances morale, and demonstrates to your customers, competitors and peers that your company is growing, successful and forward-thinking.
Here is an example: As an employer, you give employees $3.00 for every $100 dollars they save in a qualified retirement plan, and if you want similar benefits for yourself, you may put up to $12.00 more into your own retirement account. Your employees deduct the amount put into savings from their gross income—meaning they can put money away before paying income tax on the money, and it will grow tax deferred. When they retire, they will receive a check, taxed as ordinary income, every month for the rest of your life. Not a bad deal.
The above 401K-based Profit Sharing Plan is just one example of how a retirement plan works. The benefits to a business and its employees are considerable. The business provides a benefit to help retain valued employees, and the employee saves for w well earned retirement. Best of all happy employees become more efficient as a part of the business team with a personal stake in making happy customers , which benefits the business -- and its owner.
