Q: We're interested in setting up an ESOP for a small corporation. Do we need a lawyer or CPA to handle the paperwork? W.S.B.
A: Yes. If you determine that an employee stock ownership plan (ESOP) is a good fit for your company, we recommend you use an attorney to draft the necessary documents and a very competent tax pro, too. (This may or may not be the attorney). Note that the costs for setting up and maintaining an ESOP can be quite high—five figures isn't unusual—so that's a critical factor you should consider. For a small company that isn't profitable, an ESOP may not be worthwhile. Tip: You must submit the plan to the IRS for approval. You'll receive a "letter of determination" in return.