You might be wondering if it’s worth offering benefit packages to employees this early in your business’ life, especially because you may have a small budget. But the benefits you offer beyond your employees’ base pay can set your business apart from your competition.
Typical Startup Benefits to Offer
To give you an idea of key benefits to include in your package, you can look at more established businesses to see what they offer their full-time employees. Many companies offer similar types of benefits to help their employees’ health and wellness, as well as improve their work-life balance.
Health Insurance
Health care costs continue to rise each year. Offering your employees a comprehensive health insurance plan can help cover some of their preventative exams and medical expenses.
There are different types of health insurance that you can include in your benefits package. When your business offers health insurance to your employees, it’s considered a group health insurance plan. This means your business pays for a majority of the plan, while your employees pay their portion through payroll deductions.
You can give your employees the option to choose their coverage level when they pick their health insurance. This lets them choose the appropriate plan and prevents you from paying for a plan they may not fully use.
Workers’ Compensation
Your employees can get hurt or sick from their job. And if they do, their health insurance coverage won’t help cover treatment costs, because it’s a work-related injury or illness. Getting workers’ compensation insurance, also known as workers’ comp or workman’s comp, gives your employees benefits to help them recover and return to work.
Generally your workers’ comp cost depends on your:
- Payroll
- Number of employees
- Employees’ job types
- Claims history
You can pay for this insurance with one lump sum, or with pay-as-you-go workers’ comp, which bases your cost on your actual payroll.
Accidental Death & Dismemberment
Also known as AD&D, this insurance supplements your employee life or health insurance policies. It pays a lump sum to your employee if there’s an accidental death or loss of physical function or limbs, such as their:
- Vision
- Speech
- Hands
- Legs
Retirement
Giving your employees a chance to save for their retirement is a benefit offered by many businesses. There are many types of retirement plans available to give your employees a tax-deferred way to save. Whether you opt to start a 401(k) or use a Simplified Employee Pension, contributing to your employees’ accounts helps them save for their retirement.
Paid Time Off and Sick Time
Offering paid time off or sick time to your employees can help them manage their work-life balance. Larger companies can offer employees more time off than smaller companies. But even if you can only offer a few days, it can help attract and keep employees at your startup.
Key Benefits to Make Your Startup Stand Out
Finding unique benefits to offer your employees can make your startup company stand out. Whether it’s creating more flexible work environments or opportunities for development, you can create a benefits package that not only helps you find workers, but also encourages employee retention.
Flexible Work Options
When you’re in the early stages of your business, you may not have the resources to rent office space. So, it might make sense to offer a flexible work option, like letting your employees work remotely. This not only helps your business save on real estate costs, but it lets prospective employees know they have the option to work from home if they want.
Stock Options
Buying stock in your business is an additional compensation option that you can give your full-time employees to attract new workers. There are different types of stock options you can offer. For example, an incentive stock option lets your employees buy company stock at a discounted price, and they get a tax break on the profits after selling their shares.
Employee Wellness Programs
Chronic conditions and risk factors cost U.S. businesses $36.4 billion a year because of employee absences.1 That’s why it’s important to encourage health and wellness. Creating an employee wellness program helps your employees live healthier lifestyles. You can even offer incentives for participating, like discounts on their health insurance.
Training and Development
Your startup employees want the opportunity to grow at your business. You can make it a priority to provide training and development to your employees. This can include covering the costs to attend a conference or helping them pursue a graduate degree. You can also create a mentorship program for your employees. These opportunities can help you retain employees, instead of seeing them leave for another company.
Startup Benefits & Compensation for Small Business Owners
Business owner compensation is as important as offering employee benefits. It’s not uncommon for small companies to not be able to pay a regular salary. But, there are things you can do as part of your compensation package to get you through the early stages of your business.
Pay Yourself What You Can
You might think it’s easier to not pay yourself and instead focus on growing your startup. But there are advantages of startup business owner compensation. When you pay yourself what you can from your business, it provides a flexible approach to compensation. You’re not guaranteeing yourself a regular salary or paycheck, but rather letting your company pay you when it can. And as it grows, your company will pay you more.
Base Your Pay on Industry Standards
You can research what your peers and other startups in your industry pay themselves. By paying yourself the industry standards for startup business owners, you’re giving yourself a full salary and making less of a financial sacrifice. The trade off, however, is that it can have long-term impacts on your business, as it may be unrealistic to expect your startup to pay an industry-norm salary.
Pay Yourself More Later
It may make sense for you to wait until your business can pay more later, like after you have additional profit and continued growth. It won’t have as much of an impact as paying the same amount in the early stages. It’s a good idea to make sure you’re complying with financial laws. Because if your pay arrangement seems too loose, it can raise red flags with the Internal Revenue Services.
Postpone Your Payment
If you’re willing to make a financial sacrifice to give your business an opportunity to grow, you can postpone payment until a later date. Think of it as your business using your pay as a loan. Although this can help increase your business’ short-term cash flow, it means you don’t get any payment for your work. Plus, there can also be tax or accounting issues. So, you’ll want to work with an accountant to properly set up the loan.
