Opportunity #7: Profit-sharing
Every day, a crucial question.
A clear and concrete answer every day.
Excerpt from the book “50 Answers to Our Entrepreneurs”, written by François Cattin, founder of the Group Les Experts Unis.
The book was completely updated and rewritten last September.
We are talking here about legal profit-sharing, that is to say, with a profit-sharing agreement filed with government authorities.
And not a bonus agreed between employees and the boss, even to achieve a common goal, which will be treated and taxed like a regular salary.
How the government defines profit-sharing:
"Profit-sharing is an employee savings plan that allows employees to receive a bonus proportional to the results or performance of their companyThese results are assessed either at the overall company level, or within one of its establishments or work unit.
Please note: Under no circumstances can bonuses paid as part of profit-sharing replace any element of remuneration.
The objective is to involve employees in the company's objectives and results.
In practice, profit-sharing is implemented in the company by agreement between the company and the employees or their representatives or by unilateral decision of the employer.
The agreement or unilateral decision specifies, in particular, the method of calculating profit-sharing and the rules for distribution among employees.
The document establishing the profit-sharing scheme remains in effect for the specified period, even if employee representatives are replaced.
No social security contributions for companies with fewer than 250 employees. But CSG/CRDS contributions are levied.
The employee can choose to receive the bonus immediately, in which case it is taxable, or to invest it in an employee savings plan (PEE or PER collectif) to benefit from an income tax exemption. The former remains subject to social security contributions.
The company can set up a matching contribution system which allows the employee to make additional contributions to a retirement savings plan with a "bonus" (matching contribution) from the company which will also not be taxed.
Expert advice:
Advising our banker friends to implement a profit-sharing scheme is the first reflex as soon as a company starts making money.
Profit-sharing offers many advantages. However, some constraints should not be overlooked:
In a very small business, it will affect all employees, even the least efficient, including apprentices.
The motivational and, above all, loyalty-building effect remains to be demonstrated.
Profit-sharing is not taken into account in income for the purpose of granting loans.
The distribution of profit-sharing among employees based on their remuneration, and/or their time spent at work, … is always a very sensitive subject.
However, profit-sharing applies to the manager (if there are fewer than 250 employees).
The incentive can be particularly attractive if the work is done as a family.