Employee Benefits
Non-wage compensation like health insurance and retirement plans.
Employee benefits are non-salary compensation provided to workers, including health insurance, retirement plans (401k), paid time off, dental/vision coverage, life insurance, and professional development. Benefits typically add 20–40% to the cost of an employee beyond their salary. Offering competitive benefits is essential for attracting and retaining talent.
Example
A small business offers each employee: health insurance ($500/month employer portion), 401k match (3% of salary), two weeks PTO, and $1,000 annual professional development budget.
Why It Matters for Your Business
Benefits are a major factor in hiring competitiveness and employee retention, and many are tax-deductible for the employer, making them a tax-efficient form of compensation.
Practical Tips
- •Survey employees about which benefits they value most before designing your package.
- •Consider a SIMPLE IRA or SEP IRA if a 401k is too expensive to administer.
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