Small business owners know the importance of loyal, quality employees, but recruiting them costs time and money. Since payroll is already the largest line item on most employers’ balance sheets, the thought of offering such benefits as health insurance coverage, pension plans, and paid vacations leave some questioning the importance of it all. These types of benefits can be quite costly for small businesses, at least at first glance, but in competitive fields where workers have multiple options it can really give you the edge you’ll need to attract a wider selection of candidates from which to choose.
Small businesses must manage expenses and cash flow wisely, so business owners must exercise caution when taking these benefit offerings into consideration. Employers who offer benefits are bound by certain laws and regulations, resulting in the hiring of advisers and attorneys to help them create benefit plans that comply with the law.
Here are some pros and cons to weigh when deciding if providing employee benefits will also benefit your business…
- A benefits package, especially one that offers good health insurance coverage (including dental and vision), helps attract and retain quality employees.
- Businesses get the tax advantage of deducting plan contributions, including health insurance, life insurance, and pension plans.
- The Affordable Care Act has small business provisions that incentivize employer-funded benefits.
- Employees often will accept better benefits in lieu of a higher salary, which can be a savings to the business.
- Offering benefits to employees also can be advantageous to a business owner, who may be able to get personal benefits for less money than if he or she purchased them privately.
- Offering health insurance has been shown to decrease absenteeism and improve employee health and morale; those with coverage are more likely to seek preventative care and live overall healthier lives.
- Providing benefits costs more for small employers than for large ones, less buying power = higher prices & relatively higher costs of administration.
- Small businesses have less choice in designing a retirement plan because of administrative costs.
- The more benefits a business offers, the more it must pay for administrative overhead.
- The cost of health insurance has steadily risen, making it less and less affordable to employers, and making financial planning difficult from year to year.
- Offering benefits creates concerns regarding legal compliance, which in turn causes a company to incur legal fees.
- Mistakes made in benefit plans can lead to costly lawsuits, or to regulatory fines.
At the end of the day, having great benefits will mean nothing if you’re spending more money on them than you take in.
About Oakstone Law, PL
Oakstone Law PL was founded by Bob Kleinknecht. A member of the Florida Family Trust Company Subcommittee, the Estate Tax & Trust Planning (ETTP) Committee and the Real Property, Probate & Trust Law (RPPTL) Section of the Florida Bar, Kleinknecht has 15 years’ experience.
Prior to founding Oakstone law, he spent more than eight years serving as a personal, in-house estate, tax and charitable planning attorney for a Forbes 400 family in New York and Florida. Before that he was an estate planning and estate settlement attorney with prominent firms in Boston and Washington, D.C. after beginning his career with a boutique firm in Naples, Florida.
Licensed in Florida and Massachusetts, Kleinknecht has developed a practice model that eliminates billing by the hour and offers a streamlined, customized client process supported by technology, security and a personal approach.