Many small businesses struggle to compete with larger companies for talent – especially when it comes to offering benefits. This list outlines required benefits as well as creative non-required benefits that can help you recruit and retain your valuable employees.
Every employer, no matter the size, must offer the following employee benefits:
It’s important to understand the serious penalties of not withholding social security or Medicare taxes. Employers who fail to withhold proper taxes can be charged in both criminal and civil court. Additionally, employees might not be able to qualify for social security, Medicare, or unemployment benefits in the future.
Small business owners are not required to provide the following:
Perks are like bonuses that companies offer to try and elevate their business culture above the competition. Here are non-required benefits that help to give employees a reason to stay or to sign on with your company.
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 less 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.
When you look into offering medical insurance to your employees, it might be overwhelming. Fortunately, there is plenty help out there. An insurance broker or health insurance advisor can guide you through the whole process. When you hire an outside health benefits consultant, they’ll be the resident healthcare expert for employees, so you don’t have to be on the hook to answer difficult questions about your chosen health insurance plans.
Medical insurance can encompass the following:
In general, a workforce made up of largely young, single people doesn't need life insurance. But survey your employees to see if this is a desired benefit.
Keep in mind that it’s a good idea for business owners to carry life insurance. In fact, it might even be required if you’re applying for a low cost SBA loan. According to the SBA, if the loan is not fully secured, life insurance is required for the principals of sole proprietorships, single member LLCs, or for businesses otherwise dependent on one owner’s active participation, consistent with the size and term of the loan.
The Council for Disability Awareness reports that over 25% of today’s 20-year-olds will become disabled before they retire. Two main reasons to invest in disability insurance for your small business employees is to protect your company and your employees financially. In some cases, you have to offer disability insurance because of state-mandated disability insurance requirements. If you have employees in one of these states, you need to comply with the law.
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. Here are the different kinds of retirement plans you can consider for your small business employees:
For additional basic information about each plan, review 6 small business retirement plans, from easy to complicated.
Don’t forget to clearly lay out benefits in your employee handbook. You need to create one as soon as you’re ready to hire. Not only will you be protecting your business, but you’ll empower your employees to seek out relevant information and ask questions.
In addition to benefits, there are other ways you can give employees a reason to stay with your company. Starting an incentive program is a great way to help employees feel valued and stay motivated. Quarterly bonuses, a better commission structure than your competitors, paying for additional credentials, or giving them a sense of ownership in the company through profit-sharing are all great ways to increase job satisfaction.