Building a Benefits Package for Small Businesses

Donna Nichols | Oct 11, 2023 | minute read

employee benefits packageEmployee benefits will help your small business recruit the best employees and retain them, which will also help reduce turnover costs. According to Forbes Advisor, 40% of employers believe some of their employees quit to obtain better benefits from another employer. Considering that, a well-designed benefits package can certainly give your small business a competitive edge.

Setting up an employee benefit package is easier to conceive than to accomplish. To that end, we’ll explain how to assess your business needs, outline different types of employee benefits, and explain how to build a customized benefits package for your employees.

Assessing Your Business Needs

Assessing your business needs will require you to understand your employee demographics, define your budget, and consider any legal and regulatory mandates.

Before you begin assessing your business needs, you must understand who works for you. The first step is to evaluate the demographics of your employees which will require you to take the following things into account:

  • Age
  • Gender
  • Diversity
  • Lifestyle
  • Skills and expertise

The following questions will help provide additional insight into your employee demographics:

  • Are your employees primarily young or old?
  • Do you employ a large number of immigrants?
  • Have you considered cultural and religious preferences?
  • Do your employees prefer a remote or hybrid work environment?
  • Are your employees interested in education and training?

While this process will give you great insight into the types of benefits your employees want, you must consider the types of benefits your budget will allow. Nonetheless, there are various ways you can control the cost of employee benefits.

Here are some tips for controlling costs:

  • Negotiate with providers – They’re used to working with small businesses, and the more information you can give them about your workforce, the easier it will be to get a great deal.
  • Consider cost-sharing with employees – Employees are often amenable to sharing in the cost for the benefits they want most.
  • Design wellness programs – Wellness programs are generally cost-effective as they reduce medical claims. The CDC reports that 90% of employers represent small businesses and 30% of them offer programs to encourage physical activity, fitness, and sedentary behavior.

Lastly, many contributions to employee benefit plans are tax-deductible which will reduce your overall liability while reducing costs. Additionally, 401(k) plans and health savings accounts (HSAs) offer tax benefits to your employees which will make your benefits package even more attractive.

Types of Employee Benefits

As you do your research, it helps to categorize various employee benefits and tackle them one at a time. Here are some of the benefits to consider offering to your employees:

  • Mandatory benefitsWorkers’ compensation and paid sick leave in some states
  • Health-related benefits – Optional benefits such as dental and vision care and wellness programs
  • Retirement benefits – 401k or IRA plans, possibly with a company match
  • Paid time off – Vacation, sick leave, and holidays
  • Additional perks – Employee assistance programs (EAP), flexible spending accounts (FSA), education, and training opportunities

A good way to learn which benefits your employees are most interested in is to conduct a benefits need survey.

employee benefits

Conducting a Benefits Needs Survey

The internet will help you identify a host of free online survey tools to help you gather feedback from employees about what they value most in an employee benefits package. Check out tools like Google Forms, SurveyMonkey, or Typeform to name a few. Survey tools are generally intuitive and provide fast results. Such tools generally analyze survey results automatically to elevate the top benefits to focus on. Ultimately, a benefits-needs survey will allow you to balance employee needs with budget constraints.

Building a Customized Benefit Package

Once you’ve decided on a budget and the types of benefits you want to offer, it’s time to build a customized benefits package for your employees. Some things to consider:

  • When it comes to group health insurance options, you’ll need to better understand the differences between high-deductible health plans and traditional PPO plans. You can also set up a plan for a health savings account (HSA) if you plan to offer a high-deductible health plan.
  • Retirement plans make it effortless for employees to save for retirement, and if you can offer even a small company match, your employees will appreciate it.
  • There are two ways to offer vacation time – either by giving employees a certain number of days upfront or by allowing them to accrue days off for extended employment with the company. Be sure to establish policies for vacations, sick days, and other types of leave.
  • Wellness programs can help reduce health insurance costs and keep employees healthy at home and work. They can save your employees trips to the doctor and help them pay for their fitness routines.

Finally, it’s important to consider the legal and regulatory considerations of how you develop your benefits package. Consider things like labor laws, tax implications, and disclosure obligations, and be careful not to discriminate against employees. You will find even more information and resources on the U.S. Department of Labor website.

Getting Expertise on Employee Benefits

An insurance agent is the best resource to help you analyze all aspects of an employee benefits package so you can make wise decisions for your employees and the company.

To learn more, contact one of our employee benefits specialists at the Leap Carpenter Kemps Insurance Agency at 209-384-0727 today!

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About The Author

Since 2005, Donna has been a Life & Health Benefits Advisor with Leap | Carpenter | Kemps Insurance Agency, where she uses her three decades of insurance experience and knowledge to ensure her clients get the best policies for their budget.

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