Small Businesses: The Pros & Cons of Employee Benefits

Employers are not legally required to offer employee benefits, so why do they offer them? Since payroll is already the largest line item on most employers’ balance sheets, and recruiting new employees costs time and money, attracting and retaining the top talent should be a priority. This is particularly true within competitive industries where workers have multiple options.

Small businesses must manage expenses and cash flow wisely and with much caution. It is also important to note that employers who offer benefits also are bound by certain laws and regulations. Regardless of whether there are violations, employers may need the help of advisers to create benefit plans that comply with the law. Consider these pros and cons to feel confident about what is best for your business.

The Pros

A strong employee benefits package, especially one offering health care coverage (including dental and vision), helps attract and retain quality employees. Employers who offer benefits also cultivate more loyalty and productivity among their staff. The impact it makes on work culture can be truly tremendous.

Offering health insurance is directly linked to a decline in absenteeism and better employee health and morale; as those with coverage are more likely to seek preventative care and live overall healthier lives.

Employees are also likely to accept better benefits in lieu of a higher salary, which can be a great savings for the business.

Plus, businesses that offer benefits will qualify for tax advantages of deducting plan contributions, including health insurance, life insurance, and pension plans. Business owners may also reap the rewards of a benefit plan since they will also be able to receive personal coverage through this for less money than if they were to purchase privately.

The Cons

Providing employee benefits can cost more for small employers than for large ones due to lesser buying power and relatively higher costs of administration.

Small businesses may also not have as much freedom in creating a retirement plan because of the administrative costs, as more benefits offered means higher pay for administrative overhead.

To keep up with the rest of the marketplace, the cost of health insurance has continued to rise at a consistent rate, which can make the affordability and financial planning more difficult for some businesses. However, the small business provisions of the Affordable Care Act have made alterations to this balance to improve employer-funded benefits by using incentives.

Keep in mind that mistakes made in benefit plans may also cause costly lawsuits, or lead to regulatory fines, which is why it is so important to get professional assistance.

About Barnes Insurance Agency

At Barnes Insurance Agency, we specialize in vacation home rental insurance to ensure the protection of your property and assets. We strive to offer customizable solutions to meet your specific needs. For more information, contact us today at (866) 733-5424.

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