Running a small business comes with its own set of challenges, and one crucial aspect that can significantly impact your company's success is the benefits package you offer to your employees.
A well-designed benefits package not only attracts top talent but also contributes to employee satisfaction and retention. In this blog, we'll explore the basics of benefits selection and how to choose the right benefits package for your small business.
What is a Benefits Package
A benefits package is a collection of perks and offerings that employers provide to their employees in addition to their salary. These benefits go beyond monetary compensation and are designed to enhance the overall well-being of employees.
A comprehensive benefits package can include health insurance, retirement plans, paid time off, flexible working arrangements, and various other perks.
What is Required
While small businesses are not legally obligated to offer the same extensive benefits as larger corporations, there are certain requirements that need to be met. Understanding these requirements is crucial to ensure compliance with labor laws and to create a competitive edge in the job market.
Social Security, Medicare, and FICA
Legally, employers and employees must contribute to Social Security, Medicare, and the Federal Insurance Contributions Act (FICA) funding. These are federally mandated programs that provide benefits for retirees, children, and disabled individuals.
According to these regulations, employers must contribute 6.2% of an employee’s gross compensation to Social Security and 1.45% to Medicare.
Unemployment Insurance
Unemployment insurance is designed to give financial support to an employee whose employment has been terminated through no fault of their own. How much an employer pays for this program varies depending on your state’s requirements.
Workers’ Compensation
This insurance protects both employers and employees during work-related accidents and illnesses. It covers the medical or other necessary costs caused by the accident. While this is required in every state other than Texas, the specific requirements vary from state to state.
Family and Medical Leave
The Family and Medical Leave Act (FMLA) allows employees to take protected leave during certain life events such as childbirth, serious illness, or caring for an immediate family member during an emergency. Eligible employees receive up to 12 weeks of unpaid leave during which their job is protected.
Health Insurance
Depending on the size of your business, you may be required to offer health insurance to your employees. The Affordable Care Act (ACA) outlines the rules and regulations regarding health insurance coverage for businesses with a certain number of employees.
It’s important to keep in mind that each state has its own legal requirements for each of these statutory benefits, and oftentimes, they are dependent on the exact size of your business. As such, be sure to do your research and understand what the expectations and requirements are in your area.
How to Choose the Right Benefits Package for Your Small Business
Not every small business’s benefits package will look the same. When it comes time to piece yours together, there are a few things you should consider.
Understand Your Budget
Before diving into the world of benefits, assess your budget constraints. Determine how much you can allocate to employee benefits without compromising the financial health of your business.
It’s important to note that this doesn’t need to stay the same. As your company grows and changes, so will your budget and benefits package.
Choose a Variety of Benefits
While we have listed the required benefits above, there are plenty of others you can also choose to include such as Paid Time Off (PTO), retirement plans, Flexible Spending Accounts (FSA), and more. These can help make your benefits package more appealing to the talent you wish to attract and help you stand out against competitors.
Know Your Employees
Consider the demographics and preferences of your workforce. A benefits package tailored to the needs of your employees will be more appreciated and effective. For example, if your workforce values work-life balance, flexible scheduling options may be a priority.
You can also get your current employees involved in the process. Conduct surveys or group interviews to gain a better understanding of what your people want and need. In the end, this will allow you to create a unique benefits package that appeals directly to your employees and the people you are hoping to attract to your company.
Explore Support Options
Seek advice from benefits consultants or HR professionals. They can provide guidance on industry trends and legal requirements and help you design a benefits package that aligns with your business goals while still attracting and retaining top talent.
Regularly Review and Update
The needs and expectations of employees evolve over time, as do industry standards and regulations. Regularly review and update your benefits package to ensure it remains competitive and compliant with the latest laws.
Choosing the right benefits package for your small business is a strategic decision that requires careful consideration. By understanding the basics of benefits packages and tailoring offerings to your employees' needs, you can create a package that not only attracts top talent but also fosters a positive and productive work environment.
Please let us know if you have any questions. We understand that local companies have unique needs that most national firms don’t consider or struggle to identify. This leaves your people with a less effective, one-size-fits-all benefits plan. However, our ability to cater to the needs of our clients comes from decades of client partnerships. This perspective allows us to fully address unique needs and generate creative benefits plans.
You shouldn’t have to worry about just being a number, offering a generic plan, or getting the unique support you need. Call us today.
This Benefits Insights is not intended to be exhaustive nor should any discussion or opinions be construed as professional advice.