Having a decent employee benefits package for your employees is important for your small business. It can help keep your business well-liked. Doing so, however, can be a challenge. It can take a lot of time out of your day, especially if you don’t have enough employees to warrant a formal HR department.
There are a lot of things you have to think about. Here are some things to consider.
Medical, Vision, and Dental Benefits
Small businesses are often in a difficult situation with healthcare. You may not be able to afford to offer it, but you also can’t afford not to.
You could consider offering a high-deductible health plan combined with an HSA or FSA; this is often a cheaper option, although employees may feel they are paying more. FSAs can be better than HSAs because employees can use the money for more purposes. Finding the right health insurance plan is also a challenge.
It’s vital that your benefits are affordable for both you and your employees. Putting together a small business employee benefits package can be complicated, and you also need to know what is competitive in your industry. Our Small Business Employee Benefits Package Checklist can help you understand and keep track of things you need when creating the package.
Life and Disability Insurance
Life and disability insurance often help you attract talent, but can also be expensive. The key is to make your offerings inexpensive compared to what they can afford on their own. They still have to be affordable, however. Unfortunately, disability insurance is hard to offer until your business is established, so this might be a plan for the future.
If possible, you should also consider key person insurance, which will help your business survive if anything happens to you.
It’s relatively affordable to offer a 401k plan, but less than half of small businesses do. This means that offering a plan can really make you stand out when it comes to attracting top talent. It also comes with some tax advantages. A lot of business owners think they have to grow to a certain size to qualify for a plan. This is not true; even sole proprietors can get a solo-401k.
You don’t have to match employee contributions, although doing so can also help recruitment. The plan costs are lower than you think too; historically they have been high, but many companies have realized that by not catering to small businesses they are losing out.
And, of course, you can sign yourself up for the 401k, which as many small business owners aren’t saving enough for retirement is a good thing.
Small Business Employee Benefits Compliance
You don’t have to offer health insurance under the ACA until you have 50 full-time equivalent employees, but the designation is 30 hours, not 37.5 or 40.
That’s one example of compliance with benefits. Another is deferred compensation, which generally includes any retirement plan. You need to make sure that your retirement plan is compliant or you and your employees may face an unnecessary tax burden. Roth 401ks are not tax-deferred but are generally only used by employees who expect to be in a higher tax bracket when they retire, which is uncommon.
401k plans are considered qualified deferred compensation plans and one rule is that they must be offered to all employees, even part-timers. This protects the plan in the event that something happens to your company. For small businesses, other kinds of deferred compensation plans are generally not worth it for you or your staff, unless you have multiple high-earning employees.
This process can be daunting to take up on your own. Download our Small Business Benefits Checklist to get a jumpstart.