Profit Sharing

Encyclopedia of Small BusinessJ-Z (2009)

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Profit Sharing

"Profit sharing" is a type of compensation paid to employees by companies. Payment of a profit sharing bonus to non-management employees typically takes place at the discretion of the company and does not constitute an entitlement—although if it is paid routinely and year after year, employees may come to count on it as part of their compensation. Profit sharing bonuses are treated as income for tax purposes upon receipt unless made to deferred compensation plans.

As part of its National Compensation S...

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