ESPPs, employee stock purchase plans, give employees the ability to buy company stock at up to a 15% discount off its fair market value (FMV).

Regardless of market conditions, employees have the ability to make a certain percentage off their investment each offering period, which is anywhere from three to twenty-seven months long.

1. Employees who take advantage of a company ESPP feel rewarded when they make a profit off an investment they've made in the company they work for.

2. Companies offering bonuses based on company performance motivate employees by the potential increase in their pay, as well as the potential increase in what they can invest in the ESPP stock.

3. Offer a company ESPP through payroll deduction and keep the paperwork simple from an administrative aspect.

Action Steps
The best contacts and resources to help you get it done

Start your own employee stock purchase plan

Make sure your company qualifies to offer an ESPP under Section 423 of the Internal Revenue Code which offers great flexibility for you and your employees. Under this plan, most full-time employees with two or more years of service are allowed to participate.

I recommend: StockTrans gives you the flexibility of having full service assistance with setting up and administering an employee stock purchase plan, or they can help you choose the right ESPP software that lets you handle all the details. National City can help you implement and maintain an ESPP plan. Computershare is a full service provider for employee stock purchase plans.

Get the ESPP stock training you and your employees need

Hiring a professional ESPP stock consultant or firm that specializes in ESPPs will be well worth your money to make sure the program is set up and managed correctly. It is also important that employees have access to any ESPP stock advice they require.

I recommend: The National Center for Employee Ownership (NCEO) has many resources and links to resources to help you get informed on the benefits of starting an ESPP. Read through How to Choose an Employee Stock Plan for Your Company to determine if an ESPP is a good fit. If you join NCEO, you will have access to experts as well as service providers to set up your employee stock purchase plan.

Dig in with more ESPP stock information

No matter how much you know about employee stock purchase plans, it is always good to know where to go to receive help with ESPP stock questions. Your accountant or financial advisor may be a beneficial resource, but even they will have somewhere to turn to for answers.

I recommend: There type and amount of ESPP stock information available for everyone through MyStockOptions.com is invaluable as well as up-to-date. Search through the online Internal Revenue Service site for answers to any questions regarding ESPPs.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  ESPPs are excellent short term investments for employees who participate. If you start employee stock purchase plans at your company, tout the advantages so that all employees who qualify will take advantage of the program.