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Discussion in 'Business Operations' started by Ocutter, Feb 22, 2001.
How does profit sharing work. Is it the same as a bonus?
Yes. But it requires considerable documentation and you'll have to open the books to whomever is participating so you can justify what they get from the overall profit. For a small business that can be tough - both from an emotional standpoint and from a documentation standpoint.
I think that John's right on this one (again -sheesh,LOL)
Actually I think that as we have talked about in the past, that companies like you and I "O" - are better off giving out bonuses and keeping the ledgers closed.
Just my .02
One thing you will find as a business owner, employees think you are getting rich off their work and not paying them enough. If they see more money for you than they got, well watch out. Here comes the fireworks. It doesn't matter if you have all the liability, spent your sweat, tears and money, took all the risk to get it started, they just don't understand. If they did, they wouldn't be working for you. The thought of equipment cost doesn't add up to them. If they find out you do estimates based on say $60 per hour when they are working they will want more money. They don't understand the cost of doing business. So in short, KEEP THE BOOKS CLOSED TO EMPLOYEES. You must keep yourself separated from them.
Personally i dont like bonuses carved in stone.Once you iniate them they are too hard to remove even if conditions change.I once listened in on a conversation where an employee received a 1000 dollar bonus for 7 years,that year business was down so they only got a 500 dollar bonus,they cried and complained how they were banking on 1000 not 500.Even called their boss a cheapskate,I had to voice my opinion afterall Im a boss.I told them they should be glad to get any amount of free money afterall they didnt have to work for it.He said B.S. I worked all year.I said did you get paid? he said......you know where this is going. The best bonus is unexpected cash when you feel its earned.