Are you running a thriving small business? Attracting and keeping valuable employees can make or break your bottom line. It can be hard to compete with large businesses – with big budgets – for top talent. What is one way you can find great employees who will stick around? One word: benefits.
Although salary is always important, employee benefits are right up there too. Not only will benefits affect your employees financial and physical health, benefits can impact their immediate family members too.
Small business owners may think that they can’t afford to offer employee benefits. However, if you want to be a top-notch employer, attract top-notch talent and keep your team members happy, take a look at your budget. Benefits could be as important as other fixed expenses. Here are some benefit guidelines.
There are benefits that every large and small business owner is required to follow.
- 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, thus 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).
You are not required to provide:
- Retirement plans
- Health plans (except in Hawaii)
- Dental or vision plans
- Life insurance plans
- Paid vacations, holidays or sick leave
Benefits You Should Strive to Offer Employees
This benefit is probably the most important to many employees. You can offer traditional health insurance or “managed care.” Traditional plans typically come with higher premiums and a large selection of care providers. Managed care plans carry lower premiums but offer a smaller amount of providers. Most states require that employers cover at least 50% of the premiums.
Health insurance costs vary depending on company size, industry and location. Most small companies allot between 10% and 15% of payroll costs for health care. The Small Business Administration has a plethora of information about this topic on their website.
Even if your staff is on the younger side, that doesn’t mean they are ignoring retirement. Stay competitive by offering a retirement plan such as a 401(k).
A contribution plan allows employees to set aside a portion of their paycheck. Some match a percentage of the amount employees contribute. When you establish a retirement plan, outline eligibility requirements like length of time at your company.
Pick a Broker
Once you’ve decided on a basic benefits package, find a local agent with industry expertise to help you out. The best brokers know their product inside and out and can help out when claims have problems. Note:
brokers receive commissions from insurance companies for selling their products. Do a bit of research and ask other business owners for recommendations to find a reputable and honest broker. Check out this handy guide from the Wall Street Journal about picking the right broker for your business: How to Hire a Health-Insurance Broker or Agent. Keep in mind that brokers make a commission from products that they sell. If you feel that you are being pushed to purchase a particular plan, take a step back and look at other brokers.
The Bottom Line
Attracting and retaining key employees should be a priority in this completive environment. Take a look at your cash flow and working capital to make allowances for benefits. Your employees will thank you – and stick around!
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