Let’s benefit from the benefits experts. ROT Special Edition

Our last newsletter discussed selecting the right benefits for your company. If you have not read the article, please stop and read that now. We will continue that discussion with two benefits experts Eli Santiago with Alpha Savings Consultants and Joe Dawida with Human Interest.?

I asked both of these experts two simple questions.

• If you were a small business owner, how would you go about deciding on what benefits are right for your employees?
• What are some unique benefits that most SMBs have not thought about?

Below you will find their insights; please leave any comments or questions in the comments below. Also, if you would like to be a contributor to the ROT Newsletter, feel free to connect with me.

Eli Santiago

CEO, Alpha Savings Consultants

[email protected]?

If you were a small business owner, how would you go about deciding on what benefits are right for your employees?

A small business owner understands the need to provide benefits that employees need and want and that are meaningful as a way to attract and retain employees. Typically, employees seek benefits from an employer that they would ordinarily pay out of pocket if the employer did not provide the benefit. For example, some benefits are related to health care, some to financial planning, and others to time off for vacations, sick, and childbirths.?

The small business owner can only sometimes compete with the larger corporations. Sometimes the cost of providing a benefit is so prohibitive that what the owner can afford results in a benefit with no perceivable or appreciable value. On the other hand, an owner can partially fund a benefit and have the employee pick up as an employee share part of the costs. In this way, the employee can get a meaningful benefit without paying 100% of the costs. In addition, some benefits, like retirement contributions, allow employers to benefit employees while setting vesting schedules designed to encourage employee retention.

What are some unique benefits that most SMBs have not thought about?

The standard benefits usually involve some form of health benefit, sick and vacation leave, disability insurance, and some form of retirement plan contribution. Many employers stop there. Today, an increasing number of employers are recognizing the value in making employee pay available when earned. This is often referred to as earned wage access, or EWA. EWA is growing in popularity as a way to attract and retain employees. This practice will grow rapidly over the next few years if an employer can offer this without incurring cash flow considerations, even better. This will be the case if they partner with an organization willing to front the pay advance and collect the advance on the normal payday.?

Another benefit that is growing in popularity is the introduction of pre-tax section 125 cafeteria plans. Employers can save hundreds of dollars per employee on FICA taxes while employees realize an increase in take-home pay and the virtual elimination of various forms of co-pay. An employer must investigate this arrangement and assess if it would benefit employees and employers.

Joe Dawida-Partner Account Manager

Human Interest

Email - [email protected]

If you were a small business owner, how would you go about deciding on what benefits are right for your employees?

Running a small business in today’s world is more difficult than ever.? Staying current with the ever-changing tax laws and regulations, ensuring you have the right business insurance, dealing with HR issues, managing benefits, training and re-training employees, and much more are just some of the back-end administrative processes that go into running a business.? That doesn’t even factor in all of the front-end processes that go into running a business.? Many small businesses biggest challenge is finding employees to work for them.? Offering the right benefits can make the difference between attracting and retaining rockstar employees.??

A small business owner, though, may not always have the financial where with all to offer every benefit in the book and, therefore, have to decide what benefits they can afford to best position themselves to possible new hires.? They also have to consider how they, as the small business owner, can utilize and take advantage of the benefits they implement.

The government recently passed the Secure Act 2.0, which significantly incentivizes small businesses to start offering 401ks.? Businesses with 50 or fewer employees are eligible to receive a tax credit of up to 100% of the administrative costs of a 401k for the first 3 years that the plan is in place.? This is a big increase from the original Secure Act, that only offered a 50% tax credit.? There are also tax credits for employer contribution that matches their employee's contributions.? These incentives have made it more affordable than ever for businesses to look into offering a 401k retirement plan.??

What are some unique benefits that most SMBs have not thought about?

A 401(k) plan is one of the most sought-after benefits that people looking for a job are on the lookout for.? However, many small businesses have traditionally not offered 401(k)s.? This is because they traditionally have been a heavy administrative burden due to the many different aspects of a 401(k).? However, innovations in automation and technology, such as payroll integrations, have changed the game and allow small business owners to spend less time on the backend paperwork and more time on what they do best, which is run their business.

There are 3 main reasons a small to mid-sized business will look to start a 401k.

Employee Retention and Recruiting?

A 401(k) can help retain your best talent even in the hardest times.

? 4 out of 5 employees say they want benefits instead of raises.? Some questions a small business owner needs to consider are:

– Who is the most important employee at your company? What would happen if they left? – What benefits do you offer your employees?– Are you having a hard time keeping or finding employees??

Tax Shelter??

In 2023, an owner of a small business can shelter up to $66,000 ( up to $73,500 if over 50yrs old ). In addition, as an employee of your company, you may contribute up to $22,500 to the plan from your salary ($30,000 if age 50 or more), and you can also receive any matching and/or profit-sharing?contributions?that you provide to the plan up to the limits. This tax savings alone may cover the plan costs for some small businesses.

Personal Retirement?

Saving for personal retirement is often overlooked by a small business owner; however, that doesn’t make it any less important.? Building a nest egg in the form of a 401k as a business owner allows them to leverage the business for their retirement.???

I want to thank Eli and Joe for their contribution. They have both provided our ROT readers with unique perspectives and information for you to use in your business. It is imperative that all SMBs think about their benefits through the lens of building trust with their employees. A great set of benefits that speaks to the needs of your employees can be a key component of your employee attraction and retention plans.?

Now that you have been empowered with information, it is up to you to start working on your plan. If you need help from one of our experts or a member of the IAS team, feel free to connect and get your free consultation.

If you want to trust your business?

• To operate without you.
• Take the vacation without fear of it all falling apart
• To not have to pull all the levers and push all the buttons to make your business work
• To have employees that care about solving problems and not creating them?

Then schedule a free discovery call to see if the ROT Process is right for your business

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