Help with Profit Sharing Idea's

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Oct 11, 2010 5:30 pm

Basic Info : Small construction company. Our company offers
profit sharing to our two Project Managers. They receive (split) 25% from the
company profits monthly,  amount varies monthly.

There have been two questions/ requests brought up at a
recent conference, and we are not sure if we are able to accommodate the Project
Managers request.

1.       Request
One : The Project Managers have wanted to give “Bonuses” to their Foreman’s for
incentive and job well done on certain projects. They want to take it
out of their % of profit sharing, however not sure how we can accomplish this
or if legally possible

 The Project Managers would rather not give the
Foremen “cash” from their profit check because of tax issues. What we are  wondering is if the company could cut the
Foremen a “Bonus “check from the % of profit the Project Manager would receive for the month
(it would be taxed as income to the Foremen). This would only be done upon
Project Managers request, and individually as each Project Manager has
different Foremen and run different jobs

Example:

Project Manager Months Profit
share   12.5%
totals..............................20,000

Foreman bonus (Managers
discretion) ......................................2,000 (taxed as income to
foreman)

Payout to Project Manager for
profit share...............................18,000 (Taxed as income to Project
Manager)

2.      
Request Two: The Project Managers would like an
“assistant/ field rep” to run errands, handle their paperwork, calls, ect. and would be on
the road with them. We cannot offer our office people to them for assistants as
they are based at the office and we only have two, we also are not willing to budget
the expense for this as we feel we pay salary and profit sharing to them to
complete their tasks.  The Project
Managers had asked if the “assistant” could be hired under the company, but
their salary come from their profit sharing (same scenario as the “bonus” pay
for foreman.  We would not have a problem
with this, and we would be willing to pay the unemployment insurance,  exc. for the “assistant” Is this possible and
legal to do.

Example:

Project Managers Months Profit
share   12.5%
totals...................20,000

Foreman bonus (Managers
discretion) .....................................       2,000 (taxed as income to foreman)

Assistant’s Salary
(Month)............................................................      2,000(taxed as income to Assistant)

Payout to Project Manager for
profit share.................................16,000 (Taxed as income to Project
Manager)

We are willing to have our payroll
do this for the Manager’s, I would think they could do what they want with
their money, but would like to know if there is some reason legally we cannot
do this. We are a small company so some areas are a little unsure to us but we
cannot think of any reason this could not be done, and all money would be
taxed.