Small Business Guide to Building a Benefits Package

What is a Good Employee Benefits Package

A generous benefits package for employees is the best way to hire as well as retain the talent which you currently have.  The success of an small business may be measured using various metrics including profits and revenues, number of new ideas implemented, his or her service to the community and so on. One of the most significant of such factors is the impact that an small business has on his/her employees.

Your workers’ lives are not just affected by tangible rewards like the raises, but it also comprises of intangibles such as mentoring, which can profoundly affect their life. This can be amongst the most satisfying parts of owning your own business. It is what can keep a person up during nights. It takes a lot of financial planning along with careful thinking to offer such packages. Here is a brief overview of the important points while creating and implementing benefits packages.

Health Insurance

Health Insurance is the largest and toughest part of any employee benefit budget; primarily because of how rapidly the premiums rise. The 5 options that there are for companies who want to add or change the provider of health care are:

  • Preferred Provider Organizations (PPOs)
  • Health Maintainece Organizations (HMOs)
  • Self Insurance
  • High-Deductible Health Plans
  • Point of Service Plans

Dental insurance is another important component- though it is not required by law. The various types of dental plans are:

  • Fully Funded Employer Plans
  • Fully-Funded Employee Plans
  • Partially Funded Employer Plans

Flexible Spending Accounts (FSAs)

FSAs are a method of setting aside funds on pre-tax basis to be used against any basic medical costs that may be incurred. The employee can make the choice up to the limit, which is then made available for the entire year for paying dental, medical and vision expenses. Offering FSAs to your employees will require you to possess sufficient cash on hand for reimbursing such expenses, which is to be done right from the 1st of January itself, regardless of the employee contribution at that point.


A 401(K) or a retirement savings plan is what will help you recruit and retain employees. Despite of that, not many private companies use these programs. In this voluntary retirement savings plan, employees contribute a specific part of their earnings (pre-tax), with the employer controlling and administering the plan. Many companies also match the 401(k) contributions, which are tax-deductible.


Paid vacation is a common benefit by employers, and is a low-cost benefit. The standard for majority of the small business in the United States is at least 2 weeks. Many companies start employees off with 2 weeks, giving additional time as their seniority increases. A ‘use it or lose it’ policy can be adopted. While workaholic employees may seem nice in theory, they are more likely to go through burnout and increase stress among their peers.

These are not all the Employee Benefits Packages that you can offer but are the ones that matter the most. There are additional elements, such as sabbatical, maternity/paternity leave and medical leaves that you can consider. With a sustainable employee benefits package, you will be able to get far more than the value of what you invest in them!



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