Are you a small business owner that thinks offering employee benefits is too costly or complicated? In this economy you can’t afford not to. Employee benefits are not only a valuable tool to attract and retain talent, but also a way to improve your business performance and reputation. Read on to learn about different benefits, the tax advantages available, and how working with a trusted CPA firm can help you.
Benefits of Offering Employee Benefits
Employee benefits are any non-wage compensation or perks you provide to your employees, such as health insurance, retirement plans, paid time off, and more. There are many positives to offering employee benefits, such as:
Attract & Retain Talent
Employee benefits can help you stand out from your competitors and attract qualified candidates who are looking for more than just a paycheck. Employee benefits can also reduce turnover and increase loyalty by showing your employees that you care about their well-being and future.
Improve Employee Satisfaction
Employee benefits can boost employee morale and engagement by making them feel valued and appreciated. Employee benefits can also reduce stress and improve work-life balance by addressing their personal and professional needs.
Employee benefits can enhance employee performance and efficiency by improving their physical and mental health, motivation, and commitment. Preventing or treating illnesses and injuries, or providing flexible work options, can reduce absenteeism and down time.
Employee benefits can help you comply with federal, state, and local laws and regulations that require or encourage employers to provide certain benefits to their employees, such as health care, family leave, workers’ compensation, and more. For instance, Minnesota recently passed a bill for employee safe and sick time.
Improve Employee Health
Employee benefits can improve the health and wellness of your employees by providing access to quality health care services, preventive care, wellness programs, and more.
Improve Company Reputation
Employee benefits can also increase your customer satisfaction and loyalty by creating a positive word-of-mouth and referrals from happy employees who do great work.
Tax Advantages from Employee Benefits
Offering employee benefits can also provide tax advantages for both you and your employees. Depending on the type of benefit, you may be able to deduct the cost of providing the benefit from your taxable income, reduce your payroll taxes, or receive tax credits or incentives. Your employees may also be able to exclude the value of the benefit from their taxable income, reduce their income taxes, or receive tax credits or incentives. Some of the common types of employee benefits that offer tax advantages are:
Health related benefits
Health related benefits include health insurance, health savings accounts (HSAs), flexible spending accounts (FSAs), health reimbursement arrangements (HRAs), dental insurance, vision insurance, long-term care insurance, disability insurance, life insurance, accident insurance, wellness programs, and more. These benefits can lower your taxable income and payroll taxes as an employer, and lower your employees’ taxable income and income taxes as well. For example, check out the triple tax savings from HSAs.
Retirement benefits include 401(k) plans, SIMPLE IRAs, SEP IRAs, profit-sharing plans, and more. These benefits can lower your taxable income and payroll taxes as an employer by making contributions to the plans on behalf of your employees. Your employees can also lower their taxable income and income taxes by making pre-tax contributions to the plans or receiving tax-deferred earnings from the plans. The recently passed SECURE 2.0 act has added even more tax benefits, some already in place and some still to come.
Education benefits include tuition assistance programs, student loan repayment programs, scholarships, grants, education savings accounts (ESAs), 529 plans, and more. These benefits can lower your taxable income as an employer by paying for or reimbursing the education expenses of your employees or their dependents. Your employees can also lower their taxable income or receive tax credits or incentives by receiving the education assistance or using the education savings accounts or plans.
Working with Haworth & Company, Ltd.
Haworth & Company is a certified public accounting firm that has been helping the small business community in the Twin Cities for over 30 years. We have experience with all types of small businesses and budgets, and would love to advise you on what’s possible for your situation. We even have a payroll division to help you properly implement your new taxable and non-taxable benefits! If you’d like to learn more, or inquire about our other services, please contact us today.