05 Dec Give a Raise or Offer Benefits?
Many small businesses have an annual discussion on offering employee benefits or simply giving raises. For most companies it is a matter of cost and they decide on giving the raise. There are advantages to rethinking that position.
Taxes. When an employer gives an employee a raise they both must pay taxes on that amount of money. So, a $2,000 raise can cost the employer an extra $400 in taxes and the employee loses a portion of that amount due to income tax. By offering health insurance, the employer’s contributions to employee plans are typically tax deductible. The employee can pay premiums with pre-tax dollars usually available with payroll deductions.
Attract good employees. More than half of employees say that when searching for a new job benefits are a top priority. Many small businesses are adding to their benefit packages to stay competitive and find good candidates.
Employee retention. When an employee leaves it costs money. To prevent a decrease in productivity there needs be temporary help while finding a replacement. There might also be advertising fees involved along with time spent interviewing and training. It makes good financial sense to do your best in retaining your employees.
Offer more choices. Four out of five employees would choose additional benefits over a pay increase of the same amount. Simply put, vision and dental coverage cost the employer very little but can add value to your benefit package.
If your company wants to stay competitive when hiring and retain good employees while potentially saving money, why not take a closer look at offering benefits? Give us a call to find out where to begin. Your employees will thank you.