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As a small business owner you may feel that you just don't have the revenues to offer employee benefits.

But what if...


  • A valued employee asks for a health plan
  • You lose a potential hire to a competitor with a 401(k)
  • You'd like to maximize your own retirement savings


The only benefits you are required to provide are contributions to Social Security, Medicare, unemployment insurance, workers' compensation and health insurance if you have 50 or more employees. But, many small employers do voluntarily offer employee benefits because they result in:


  • Greater ability to recruit and retain talented workers
  • Increased productivity and reduced absenteeism due to healthier employees
  • Significant tax advantages to both owners and employees
  • Improved morale and a more positive attitude in the workplace


Typical Benefits Offered by Small Companies


Insurance helps assure a healthy, active work force and protects employees and their families in case of illness, disability or death.


  • Health insurance gives employees a break on medical expenses by applying group purchasing power to the cost of health insurance. Plans that focus on preventive care also benefit YOU by keeping employees healthy and working.
  • Life insurance is an important benefit to most of your employees. Group term life insurance is the most common form.
  • Disability insurance guarantees to pay a portion of an employee's salary in case of illness or accident. A person age 21 is four times more likely to become disabled than to die before he or she reaches age 67, according to the Social Security Administration. Some people consider disability insurance even more important than life insurance.


Retirement Plans

There are a number of retirement plan options for small businesses. The type of plan available to you depends upon your business structure. You can choose a plan that requires either a fixed or variable percentage of your employee's compensation.

What plan is right for your business? 401(k), SEP-IRA, SIMPLE? There's so many choices that many business owners prefer to work with a retirement plan consultant who can recommend a plan that will meet their specific needs.

Paid Leave

Paid leave is always popular among employees, and costs you very little. Employers are required to give up to 12 weeks of unpaid leave if employees need time off to deal with their own or a family member's medical condition. However, paid leave is strictly optional. Paid leave may take the form of vacation, holidays, sick time, and other time off at the employer's discretion.

Average Costs of Employee Benefits

According to the U.S. Bureau of Labor Statistics, employer costs for employee compensation averaged $34.05 per hour worked in June 2016. Of this, $23.35 is spent on wages and salaries, while the other $10.70 is spent on benefits, including the required benefits mentioned earlier.

Take Action

Talk to your employees about which benefits they'd like to have. Some small business owners do not offer benefits because their employees would rather have the cash. So it's important to spend any benefits dollars wisely.

Cost sharing options are available, such as...


  • Life insurance - you pay for a flat amount ($10,000-$50,000), employees pay for additional coverage
  • Health insurance - you pay all or a portion of employee coverage, employee pays the balance plus full cost of dependent coverage
  • Retirement plan - depending on the plan chosen, you pay a small set percentage or a partial "match" on employee salary reductions.


Given the vast range of employee benefit packages out there, you may want some help. Qualified consultants are available who can discuss your business needs, your employees' needs, the amount of resources you have available and make recommendations.

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