Offering Benefits May Be the Answer
Author: Keith Huggett
Just about every employer feels that they are overpaying their employees, just as many employees feel that they are underpaid. However, there is much more to a total employee compensation package than just salary or hourly wages. Perks and benefits can add as much as 30 percent to an employee's total income. Furthermore, shifting the way you pay employees to include a higher proportion of benefits and perks can save you a great deal of money.
There are a number of perks and benefits that companies use to attract and retain employees. While some, like health insurance, are practically ubiquitous, others are a bit rarer, but equally valuable. Here are some perks that you should be thinking about:
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Health, dental and vision insurance.
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Life insurance.
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Disability insurance.
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Supplemental insurance.
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Flexible savings accounts for health, dependent care or commuting expenses.
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Tuition reimbursement.
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Pre-paid legal.
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Employee discounts at major companies.
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401(k) accounts (with or without matching)
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SEP accounts.
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Vacation leave.
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Flex time/telecommuting.
The key benefit of using perks and benefits instead of salary as a form of employee compensation is that you avoid paying payroll taxes, unemployment insurance, disability insurance, and worker's compensation on the money that you put into perks instead of into salary. In many cases, you can also avoid making those additional payments on salary money that your employees divert into benefits, such as paying for their own health insurance or funding their 401(k) accounts. A good payroll service can help you to calculate just how much you can save.
These benefits have other advantages, too. Some no-cost benefits, like allowing employees to work flex time, or negotiating employee discounts at companies like cell phone providers, are very effective for retention. Plus, many employees will not take advantage of the perks you offer, saving you more money.
Ultimately, designing an employee compensation package is a complicated process. You need to weigh costs and benefits and balance them against good tax strategy. The Tax Office Inc. can help you to strike the perfect balance and come up with a employee compensation that is far for them and for you. Contact us today to learn more.
