As a small business owner, you want to keep your employees happy and show that you value them. Not only does that make for more productive workers, but it can also mean less turnover for your company.One way to entice and retain quality employees is by offering benefits that are meaningful to them.2

At a small business in particular though, your decision to offer employee benefits may be a primarily financial one. You have your eye on the bottom line, and providing benefits costs money. However, when you make thoughtful choices, benefits packages don't have to break the bank - however large or small your company is.

Deciding which benefits to offer

To start with, research and choose which benefits you want to offer, and which benefits are affordable for your company currently. Many benefits, like health insurance, are things you can offer as a pre-tax option for employees. These options can lower workers' overall taxable income, which means they'll owe less in income taxes.3 This can also benefit you because it may lower your payroll tax liability.

Some of the common employee benefits to consider are:
  • Health insurance
  • Dental and vision insurance
  • Retirement plans
  • Flex spending or health savings accounts
  • Life insurance
  • Disability insurance
  • Paid time off
  • Paid holidays
  • Commuter benefits
  • Work/life balance benefits

Health-related benefits are usually attractive to employees, but they're also often costly for small businesses to provide.4 Start by deciding which benefits you're most interested in offering and which feel like a good fit for your company culture. Then, look into the costs associated with those benefits.5

How much should you spend on employee benefits?

In addition to knowing how much your company can afford to spend on employee benefits, you also might wonder how much you should spend. According to the Bureau of Labor Statistics, in 2019 employers pay an average of 30% of each worker's overall compensation in employee benefits.6 You can use that as a guideline for developing your own benefits packages or to stay aware of what the overall trend is.

As with other areas of your business, it helps to create a budget for your benefits packages. This helps you anticipate costs and determine if they're affordable.7 As you begin looking at providing certain perks and benefits, you'll be able to make a knowledgeable decision and better determine which options are most realistic.

If you're not in a position to offer sought-after benefits like health insurance, look into other ways you can create an attractive package for current and potential employees. Some perks don't cost much but make employees' day-to-day lives easier, which helps them stay loyal to the company.8 Lower-cost benefits, such as paid time off or the option of working from home, can be highly attractive to certain workers.9 You might also look at offering creative perks like daily meditation time, healthy snacks or even a relaxed dress code.10

It's helpful to ask employees what they want from a benefits package. Different age groups often have different ideas of what is appealing to them, and receiving input on what they value can help you make a decision that aligns with their interests. And, if they can personalize their benefits packages and choose what they'll be able to use, it can increase employee satisfaction.11

Implementing your employee benefits packages

When you've decided which benefits to offer, carefully review the total costs, including the administrative costs, of your choices. If you're going to offer an insurance plan, keep in mind that it takes time to choose the company you want to work with, review the available options and choose which plans to provide.

When offering insurance, it's essential to work with a trusted broker who can explain what the different options fully entail and help you understand which one is best for your company's unique situation. They should be able to answer all your questions and create a plan that fits your needs.12

You can also look into companies that offer employee benefits programs. These benefit providers have a wide range of plans and pricing tiers. It may be as simple as a low-cost employee assistance program or something more involved with 401(k) and IRA plans. One way to find a benefits provider that's right for you is to ask for referrals from other business owners, particularly if they're in the same industry or are similar in size to your company.

Providing benefits packages to employees is a way to show that you're invested in them. It can go a long way toward keeping them invested in your company's growth, which is a win for everyone involved.

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