Running a small business has always had its challenges. It’s tough to compete in a dog-eat-dog world when you’re the Chihuahua on the block. It’s also difficult to appear fierce to the competition while wagging your tail to customers.
Your success often rests on the shoulders of your employees. It’s a burden they’re happy to bear so long as they feel appreciated and rewarded for their efforts. However, it’s challenging to attract the best and brightest workforce when you’re competing against the big dogs.
Employee benefits can level the field, but how can small business owners offer what big companies can? Fortunately, you do have options if you know where to look for them and are willing to get creative. Here’s how you may be able to offer big company benefits on a small business budget.
Whatever employee benefits you can offer will need to be managed. Are they taxed or not taxed according to the law? Is everyone receiving the benefits they’re supposed to?
Eliminate the stress of reviewing the details of every employee paycheck by using payroll software to manage them. Affordable software options can track employee time and administer benefits in one platform. They’re user-friendly for both the uninitiated and the seasoned pro who handles payroll responsibilities.
Implement the software with the benefits you have now. Plug in new benefits as you can offer them and let the platform do the rest.
In December 2020, approximately 70% of private employee compensation was for wages and the rest for benefits. The split between legally required benefits, such as Social Security, and voluntary benefits, such as retirement, was about 50/50. That’s a chunk of change for any small business.
It will be up to you to determine which voluntary benefits you can afford to offer your employees. That’s the difficult decision you face. The easy one is choosing payroll software designed to take it from there.
If you own a small business, you probably understand firsthand how unaffordable individual health insurance can be. Many plans require a pool of only two, including you as the owner. However, the premiums can be high and the benefits extremely limited.
Still, health insurance looms large among employee benefits. Truth to tell, 56% of workers say having health coverage is what makes them stay in their current job. Some 46% say it was either a positive influence or the determining factor in taking a job. That means you’ll need to find a way to offer health insurance if you hope to land top talent.
If you have 50 or more employees, you’re required under the Affordable Care Act (ACA) to provide health insurance. If you employ fewer than 50, visit the ACA marketplace to see whether any Small Business Health Options Program (SHOP) plans are offered in your state.
Should that option fail, check with your local chamber of commerce for any group plans they might offer to small employers. If nothing else, consider offering employees reimbursement for what they’re paying for their own health insurance. Just make sure the reimbursement isn’t taxed as their income.
Avoid making the assumption that health insurance as an employee benefit is a non-starter. Research your options and find one that suits your needs and your budget. Employees present and future will greatly appreciate the perk.
Half of the working population isn’t saving for retirement. Few people can survive on Social Security alone, assuming benefits are even still around when they retire. The old major corporation pension plan may be a dinosaur, but there are alternatives for small employers.
Businesses of any size can offer a 401(k) plan. Those designed for small business forgo the pricey fees for plan administration. Administration can be a nightmare, so leaving it to someone else is smart, especially when doing so is affordable.
401k plans for small business are versatile. Some don’t require an employer contribution, although your employees will certainly appreciate one. Others are profit-sharing plans that reward employees for putting your business in the black.
Retirement plans also offer lucrative tax benefits to employers and employees alike. And employees generally recognize they must pay their dues before they can reap this reward. You can wait up to one year before making a new hire eligible for the benefit.
Offering some sort of retirement plan to your employees shows that you’re invested in their future. Sure, they can take their 401(k) with them when they leave your employ. But the gesture may help you attract and retain great employees in the meantime.
Employee leave is a challenge faced by all small businesses. In fact, the smaller the business, the greater the challenge. All employees need time off, but who covers for them while they’re gone? That’s a tricky question but one you’ll want to help your workers answer.
Giving employees paid time off tells them they deserve time away without sacrificing their income. You will have to figure out how much your business can sacrifice to make it happen. Even though it’s a stretch for many small businesses, it’s a stretch worth making.
Some companies allot a certain amount of paid time off categorically, such as sick leave versus vacation. Others combine paid leave into a set number of days, which they designate as paid time off (PTO). For example, an employee with 14 days of annual PTO could devote 10 of them to vacation and reserve four for sick days.
PTO allows employees to use their paid leave as they need to, which can vary from one individual to another. This approach makes it easy to budget PTO as a line item. Be sure to include both the total PTO compensation and the cost of covering for the employee when absent.
The fact is that the smaller your business, the more important good employees are to your success. There’s nowhere to hide when it’s just you and a handful of workers. In fact, everyone needs to be invested in your dream, or you will fail.
To compete for the best employees, you must offer some of the benefits large companies provide. To retain good employees, you might need to step up those benefits as your profits increase.
Instead of closing the door on the possibility of some employee benefits, figure out how you can make them happen. With the top-notch talent they’ll attract, you’ll soon be running with the big dogs.