Fringe Benefits in a Small Company

Fringe benefits may be expenses small companies wish to be careful about offering. After all, many small companies have to keep their overhead as low as they can in order to maintain earning a profit. Yet, when it comes to expending money or services on fringe benefits it is important to think about what the true worth of these benefits are for the company.

Most employees want to work in an environment where they are not only sufficiently paid, but are also made to feel appreciated. In many ways, fringe benefits are your way as an employer to demonstrate your appreciation for them. In this manner, the money spent on health care plans, occasional meals out, or even using a company car can be an investment in the happiness and productivity of your employees or for newspaper business advertisements.

Taxes of course usually come into play depending upon what kinds of fringe benefits are involved. Employees are generally full time workers to whom you pay wages or salaries. However, you may also have workers who are only part time, yet they too may have every reason to be offered at least some form of fringe benefits offered by your small company.

It is important to consult with your business's accountant for exact details regarding any fringe benefits provided and to whom those benefits are intended to be provided. However, keep in mind that the more you can enhance an employee's experience with fringe benefits, whether they are full time or not, the more likely they are to stay on. This helps keep turnover low and that, of course, can keep overall expenses lower, as well.

It takes a lot of time and money to invest in finding the best employees for your business. Plus, factor in the time it takes to train them properly. If an unhappy employee leaves, you are faced with the task and the expense of replacing them as soon as you can.

Deciding on Which Benefits to Provide

When a small business owner really faces the reality of the cost of losing an employee, it becomes apparent that the most economical choice would have been to offer decent fringe benefit packages from the start. While there will be some taxes involved, which you need to discuss with your accountant, they probably amount to lower costs than if a small company often faces the need to replace employees.

Especially with very small businesses, the loss of an employee might mean double the workload for you. So, take the time to carefully decide which fringe benefits you can reasonably offer to employees. Remember, it is not always necessary to provide full health, retirement or life insurance benefits, especially to those who work part time for you. But, consider what something as simple as a weekly lunch outing could mean for your staff.

The idea of a free lunch plus extra time away from work may be very much appreciated by your employees. Ordinarily this would strike you as lost work time. But, it can provide a necessary boost to morale which in turn actually makes for an increase in productivity and revenue.

Paying Taxes on Fringe Benefits

Although taxes do factor in, they depend upon what kind of business you operate and what kind of fringe benefits you offer. Some benefits are tax exempt, so discuss everything with your accountant ahead of time. Make sure employees clearly understand which benefits they are entitled to. Fringe benefits in a small company can prove to be expenses that you will want to incur as they actually can help boost revenue and productivity.

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