profit share agreement

Increase Your Profit with Profit Share Agreement

If you’re not familiar with profit share agreement, we can help you on that. In article we’re releasing our templates to the public. You don’t need to write the agreement yourself, this way you can save time and energy and still have the most reliable agreement on your hand when you need one. Remember that our templates are free for everyone. Simply choose which templates that you like, download, edit if necessary and print. Easy as that, keep reading this article to learn more about profit sharing.

Profit Sharing

Before you use our profit share agreement, let’s learn more about profit sharing. The term profit sharing refers to various plans coined by businesses that provide direct or indirect payments to employees that depend on the company’s profits in addition to employees’ fixed salary and bonuses. For publicly traded companies for example, these plans are the amount to allocation of shared to employees. This practice was started by an Englishman called Theodore Cooke Taylor in the 1800s, for his woolen mills.

In Europe, the share of profits paid to the management or the board of directors is called tantième. This term is often used to describe the business and finance practices of some European countries, such as: Germany, France, Belgium and Sweden. The share of profits is usually paid in addition to the manager’s or director’s fixed salary and bonuses, where the bonuses usually depend on profits as well (bonuses and tantième are treated as the same thing.

In the United States, profit sharing plans can be set up where all or some of the profit-sharing amount can be contributed to a retirement plan. This retirement plan is very closely related to 401k plans.

Another kind of profit-sharing plan is gainsharing. It’s a program that returns cost savings to the employee, as a lump-sum bonus. The difference is that while profit=sharing is a profitability measure, gainsharing is a productivity measure. There are also three types of gainsharing: Scanlon plan, Rucker plan, and Improshare.

Profit sharing by nature benefits highly-paid senior employee. They can see high bonuses from profit-sharing, from 40% to 50% of their annual salary. A lower level employee may only see 1% to 2% of their salary as their part of the company’s profit-sharing.

Anyway, like we promised before, feel free to use our templates of profit share agreement to set-up your own plans.

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