Colorado Launches Tax Credit to Help Businesses Become Employee-Owned

If your business is based in Colorado and you are considering employee ownership as part of your succession plan, or simply as a way to reward the workers who have helped you get to where you are, the decision just became $100,000 easier.

Colorado Office of Employee Stock Ownership (ESOP)

The Employee Ownership Tax Credit is available to Colorado-headquartered businesses to cover up to 50% of a qualified business’ conversion costs for use on their state income taxes.

Governor Jared Polis announced that the CO Office of Economic Development and International Trade will offer a state tax credit to cover 50% of the fees involved in transitioning to an employee ownership model, including up to $100,000 for companies looking to implement an ESOP.

This credit can be applied toward accountants, attorneys, advisors, and other fees involved in the transition process.

Governor Polis, a former business owner himself, has long been a proponent of employee ownership. He even launched his bid for the governorship in 2018 at Sav-A-Lot, an employee-owned company. “If you want to change a company’s culture and retain employees, employee ownership gives the company a competitive edge,” Polis said, according to Colorado Politics.

This tax credit began on Jan 1, 2022 and will remain in effect until Jan 1, 2027. At a time of tremendous uncertainty and widespread labor shortages, ESOPs offer businesses a proven way to boost their resilience and attract and retain workers.

Polis announced the tax credit alongside employee-owners from Denver-based Hercules Industries, which became 100% employee-owned in 2019.

“By having this opportunity, we can recruit better people, retain people, and I tell the young people, ‘if you stay 20 years, you’ll have two retirements: your 401(k) and your stock options,'” said Mark Kell, a 20 year veteran of Hercules.

Colorado companies looking to explore this tax credit can learn more here. The advisors at Menke & Associates will also be glad to help you with the application process, or to answer any questions you might have about ESOPs.

Contact us today for a free preliminary analysis to discover what employee ownership could mean for you and your business.

Menke & Associates, Inc. has helped over 3,500 companies successfully transition to employee ownership. Our holistic ESOP approach enables a positive outcome for the company, its employees and its shareholders. We believe ownership is powerful.

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