Brian Weckman – Chief Financial Officer & Partner, Electric Ease
Employee benefits can be one of the most overlooked areas when running your business. Healthcare and retirement accounts aren’t exactly top-of-the-list items on most contractor’s to-do lists each day. But they can have a huge impact on the long-term success or failure of your shop.
While health insurance and worker’s compensation laws can vary wildly from state to state, and not always in the clearest fashion, one area that you can tailor to your business and your employees is retirement benefits. For this post, we’ll focus on the retirement plan angle.
Crafting an attractive hiring package can be a bit of a balancing act. It’s hard to tell exactly what your team members would value the most, but generally speaking, younger workers will be focused on the highest hourly rate or salary that they can get. As workers age, they become increasingly concerned with their overall employment benefits.
Retirement plans are a relatively easy and cost-effective way to attract and retain key employees to your business. The first thing to do is to determine how much of an extra expense you are willing to incur to add an extra level of benefit security for your workers. Many business owners offer some type of combination of profit sharing and/or matching contributions that usually hover around 3% to 5% of an employee’s pay. That amount of extra expense usually won’t break the bank and it can send a strong signal to your workers that you truly value them and want them to be with you for the long run.
A big hurdle many shop owners get stuck on is the cost to start and maintain a company plan. The good news is that you can start many types of plans with a cost of usually only $50 per person, per year. There are also several more expensive types of plans you can look at, which allow many other tax-saving benefits. But those plans usually aren’t the best to look at unless you or your workers are in a position to sock away larger amounts into these accounts for retirement.
There are also several more owner-centric types of plans that can provide huge tax-saving opportunities to owners who would like to put more away for retirement. These plans can often exclude certain classes of employees so that the amount that the owners contribute for them is less of a hit to the bottom line.
Shoot me an email at email@example.com if you’d like to know more of the specifics of each type of account/plan and how it could fit with your overall hiring and growth plan.