Can your small business afford to offer employee benefits?

Times are tight in the U.S. job market, with the unemployment rate at less than 4% since the start of 2024.

So, how can a small business owner attract and retain quality talent?

It’s no surprise that employee benefits are the difference for most prospective employees. But there’s a lot to consider, especially finances.

So today, we’ll look at some of the top benefits a small business can offer, what to consider, and how you might be able to afford them.

Let’s go!

Health Benefits

Health benefits are on most prospective employees’ radars when looking for a job. Though we covered them in depth last week, we didn’t discuss alternatives to traditional healthcare plans.

These can be expensive for owners and employees, but other options exist.

One idea is to offer a High Deductible Health Plan (HDHP) and offset it with a Health Savings Account (HSA).

There are some rules to consider, so check out the link above. But HSAs can give peace of mind and tax breaks to your employees.

Retirement Plans

For years, 401(k)s seemed to be the domain of larger businesses. Startup and administrative expenses put them out of reach for most small businesses.

Technological advances, as well as the democratization of the stock market, have changed all that.

Many low-cost plans are available, but you must be aware of a few things.

First, understand all the fees associated with starting and maintaining a 401(k) for your employees. This list of questions can reveal those fees when shopping for a plan.

Next, limit the fund selection to low-cost options. This will save you and your employees a lot of money in the long run.

Finally, be aware of the tax breaks. Shopping for a 401(k) plan can be daunting, but qualified employers can earn tax credits for the first three years that offset startup costs.

Paid Time Off

This one is expensive, no doubt. On the surface, it may not seem cost-effective.

Still, it’s worth consulting your CPA for a cost-benefit analysis to determine whether a PTO plan would lower employee turnover costs.

Before you dive in too deep, though, it’s best to talk to employees. Ask them what kind of PTO plan they would prefer and see if you can implement it.

Flexible work arrangements

The Covid-19 pandemic changed the way Americans thought about work. One post-pandemic study found that 93 percent of workers want a say in when they go to work.

The good news is that most flexible arrangements are not terribly expensive to administer. But they do require plenty of planning to generate policies that keep productivity up.

Professional Development

This perk isn’t the financial bear it used to be. Online professional development options reduce travel costs and offer flexibility to the employee and employer.

That means training can be ongoing and incremental, reducing downtime and increasing productivity.

It can also serve as a great incentive for employees and make them feel more valued. That sense of value can establish excellence in the work culture.

Finding platforms isn’t difficult either. Several quality ones can be found based on your needs.

There is a slew of platforms, such as Coursera, LinkedIn Learning, Udemy, and Master Class, so finding one that fits your industry isn’t difficult.

The Bottom Line

Offering benefits as a small business owner isn’t easy, but it isn’t out of reach either. By following the ideas here and talking to your CPA and other professionals, you can create a benefits package that will help attract and retain top talent.