Hiring great employees is not a small task. And keeping them can be an even greater challenge. Offering small business benefits can be a determining factor as to whether employees stick with you for the long haul or look for something better.
Small Business Benefits: The Law
The law requires that big and small business benefits be given to each employee. As an employer, you must:
- Give employees time off to vote, serve on a jury, and perform military service.
- Comply with all workers’ compensation requirements.
- Withhold FICA taxes from employees’ paychecks and pay your own portion of FICA taxes, providing employees with retirement and disability benefits.
- Pay state and federal unemployment taxes, thereby providing benefits for unemployed workers.
- Contribute to state short-term disability programs in states where such programs exist.
- Comply with the Federal Family and Medical Leave (FMLA) laws.
Above and Beyond
Some employers choose to offer additional benefits that attract higher caliber employees. While you are not required by law to offer any of the following, including some or all of these small business benefits incentivises great employees to hang with your company.
Joe Lineberry, senior vice president at Aon Consulting says, “Give employees the benefits they value, and they’ll be more satisfied, miss fewer workdays, be less likely to quit, and have higher commitment to meeting the company’s goals,” says Joe Lineberry, a senior vice president at Aon Consulting, a human resources consulting firm. “The research shows that when employees feel their benefits needs are satisfied, they’re more productive.”
You may consider offering:
- Health plans (except in Hawaii)
- Dental or vision plans
- Retirement plans
- Life insurance plans
- Paid vacations, holidays or sick leave
Health Insurance Plan
If you take a poll amongst your employees you may find that health insurance coverage is the number one requested benefit. Health insurance coverage is vital to many Americans, especially those with families. But don’t get too stressed out about the costs. You can offer a plan where employees have to pay for some of their coverage. Many companies will cover 50-100% of the total cost for the employee, asking the employee to cover the rest.
Also, many insurance companies can put together options from which your employees can choose. Do they want to include a spouse? Dependants? Eye coverage? Dental coverage? These can be add-ons that the employee covers 100 percent, or you can offer to cover certain percentages of each. A qualified insurance agent can help put together the best package for you and your employees.
Also, a new report from the ADP Research Institute shows that less than half of all eligible employees under age 26 enrolled in an employer-provided health plan in 2015. The reason: they are still under their parents’ plans. So, if you have a business that utilizes the younger generation, you may not have to pay for as much coverage as you think.
Some small business owners make a big mistake thinking that they can’t afford to fund retirement plans. However, you may be surprised “that less than half of employees at small companies participate in retirement plans,” according to an article in Entrepreneur magazine.
Additionally, in an effort to encourage more businesses to launch retirement plans, congress enacted the Economic Growth and Tax Relief Reconciliation Act of 2001. The Act provides a tax credit for costs associated with starting a retirement plan, including a 401(k) plan, SIMPLE plan or Simplified Employee Pension (SEP). The credit equals 50 percent of the first $1,000 of qualified startup costs, including expenses to set up and administer the plan and educate employees about it. For more information, see IRS Form 8881,Credit for Small Employers Pension Plan Startup Costs.
We’re serious about taking a poll of your employees’ preferences when it comes to small business benefits. Many single employees wouldn’t put life insurance on the top of the list. On the other hand, employees with families may consider that small business benefit in their top three choices. You can guarantee, however, that if you’re offering life insurance for free, your employees will take advantage of it. So, ask them what they prefer before you pay for something that they could do without.
One of the most expected small business benefits is time off. Most full-time employees expect two weeks paid vacation per year, with more being accrued over time. Be sure to specify any stipulation you have when requesting time off including:
- How much notice you need before granting vacation?
- Whether the request can be made verbally or if it should be written?
- How many days can they take in a row?
- Are there any blackout dates?
- Does the vacation expire if not used? If so, when?
- Can you exchange unused vacation for monetary compensation?
The costs for continually searching out, hiring, and training employees can add up quickly. On the flip side, long-term employees have experience and knowledge about your company that helps troubleshoot problems, satisfy customers, and grow profits. So even though some small business owners lament and avoid including benefits, doing so can not only give you the best employees but keep them around for years. For more HR solutions, click here.