6 Small Business Employee Benefits You Should Consider

Employee benefits have become so prominent in job offers that they’re usually featured along with the total compensation. Hiring managers and human resources teams will highlight how a position includes retirement plans, flexible work schedules, dental and vision insurance and so on.

With 83% of millennials stating they would change jobs for lifestyle benefits alone, small business owners and HR teams should think about inventive employee benefits packages. A single employee benefit could be crucial in attracting and retaining talent in a small business. This is why small companies, from brand-new businesses to aspiring startups, may have an advantage in providing a comprehensive benefits package.

What Are Employee Benefits?

In simple terms, employee benefits are extra perks or compensation that employees get in addition to their salary or hourly wages. Some typical benefits include paid leave (vacation, sick days), group health insurance, and retirement savings plans. More creative perks include gym memberships or stylish Cocobolo desks.

The U.S. Labor Department recently estimated that, on top of the wages, companies will have to shell out an additional 50% (on top of the salary) to cover benefits. This figure includes employee benefits like PTO or Social Security benefits.

Everything beyond that—the perks—will also impact the bottom line. Big companies that want to offer a more attractive compensation package can easily add perks like gym passes or free yoga classes without putting pressure on their bottom line.

On the other hand, small businesses that are growing bootstrapped might not have investor cash to offer gym passes or standing desks from the get-go. That’s a challenge. However, there are small business employee benefits packages that don't require vast amounts of cash. We'll get into that.

Why Should Small Businesses Provide Benefits to Their Employees?

According to surveys from the insurance sector, less than half of employees at small companies have benefits at work, while more than 95% of workers at big companies with 1,000 or more employees have benefits. That significant divide could make workers flock to a big company and increase turnover at a small company.

For small business owners, this means there’s an excellent opportunity to gain a competitive edge by bringing small business employee benefits to your workforce.

By standing out through them, employee benefits are used as an effective recruitment tool and an exceptional retention strategy. If you can offer employee benefits to your people that the highest-paying prospective employer won't, like a flexible time off system where they don’t need to give explanations, then they could choose to stay where they are—at your company.

Remember—small business employee benefits are as effective as big-company employee benefits. It’s a matter of making the most of small companies' flexibility.

Do Small Businesses Have to Offer The Same Benefits As Big Companies?

As a small business decision-maker, you should first realize that plenty of must-have small business employee benefits, or at least those that you’d consider legally required, do not extend to companies with under 50 employees.

For instance, the Affordable Care Act—Obamacare—requires companies with 50 or more full-time workers to provide health insurance. This means that small businesses with fewer than 50 employees don't have to follow this regulation.

Moreover, the federal Family Medical Leave Act requires that your company give its workers up to 12 weeks of unpaid leave. However, if you read the guidelines closely, only companies with more than 50 employees are compelled to do this. 

This means small businesses are only legally required to contribute toward:

• Medicare
• Social Security
• Workers' Compensation Insurance
• Unemployment Insurance

Even PTO, which is still a standard benefit, isn’t mandatory in numerous instances.

If you were wondering why workers from small companies typically get fewer fringe benefits, this could be why. It’s also an excellent opportunity to launch your small business employee benefits package, make a name for yourself, and stand above the competition.

How To Set up an Attractive Benefits Package for Your Small Business: Step-By-Step

You can create a small business benefits package that will help you attract and keep the best candidates for your small business by following these easy steps: 

1. Plan Your Budget

It’s always easier said than done. Even if your budget is minimal, you can still offer exceptional employee benefits by passing the cost on to your employees. This sounds like a rough idea on paper. Still, workers would appreciate it if you had the right voluntary employee benefits program they could access, even if they pay for them.

The fringe benefits are better appreciated when they come through the employer. A survey found that around 70% of employees prefer to purchase insurance coverage through their employer, for example.

To play your budget smart, your health coverage and benefits should have built-in deductions and should have no hidden costs.

2. Select Benefits That Small Companies Are Better at Offering

Personalized, flexible, and culture-based benefits can be as valuable (and potentially more affordable) as 401(k) to motivate employees. They’re easier to roll out in small groups. Make sure your benefits can be tracked and narrowed down to a certain group of workers, and you can obtain analytics from them.

3. Decide on Your Partners

You should pick a partner with the best value and no hidden costs. A small company can count on healthcare and retirement plan providers like Paychex or Gusto.

4. Decide on a Management Tool to Benchmark the Progress

HR teams or small business owners who need to roll out an employee benefits package should consider using tech tools to help them keep an eye on assets and collect employee metrics. The before-and-after metrics are the best way of distilling the package down to what your employees value the most.

5. Explain Your Benefits Plan to Your Employees

Surveys demonstrate that this last step is often neglected. You should communicate your employee benefits and allow your employees to access them, such as through a time-off tracker.

6 Small Business Employee Benefits for 2024

Many employee assistance programs, such as health insurance, are industry standards for most company sizes. We won’t focus on the typical employee benefits like employer healthcare or offering retirement plans like 401(k), because you should have those already. We’ll offer a list of small business employee benefits that are affordable, and that can help your company level up with a morale-boosting package:

1. Flexible PTO, Work Weeks, and Remote Work

Don’t think all companies have already adopted flexible and remote work. Reports from late 2023 indicated that specific groups in North America worked from home only a day and a half per week, and wanted more. But companies want the opposite: more days at the office for employees. Since small companies can package flexible benefits without long-winded approval processes, make sure your employees can access flexible PTO and work remotely. You can always let them pick their PTO days. And people analytics can easily demonstrate how well this has impacted their mental health.

Should small companies offer unlimited PTO as part of a small business employee benefits package? No. It’s not recommended. Some startups allegedly offered unlimited PTO to bypass paying earned benefits. So the policy has a bad rep. It’s better to grant flexible PTO with a specific number of days. Over one-third of US workers get 10 to 14 paid vacation days yearly. You can go above that, and that will be a noticeable benefit.

2. Offer Healthcare Reimbursement Accounts

In small businesses, employee benefits that don't extend to health insurance or vision insurance can be paid for with reimbursement accounts. The employer needs to set these accounts up. This can be a good small business health benefit for employees covered by their partner or parent’s plan who need to add cash to their health insurance.

3. Offer Language Lessons

Many international employees who onboard your business know the language you expect them to interact with, but they’d like to feel more confident with it. You're vouching for their progress when you offer language lessons in your small business employee benefits package.

4. Offer Days Off with a Personal Touch

We already described how offering more paid holidays than larger companies can be a big draw for talent. Days off can go beyond that. Small business employee benefits can easily adjust to their employees and their religious beliefs because HR teams can pay closer attention to their spiritual beliefs. Giant companies might miss this one.

5. Offer Solutions for Parents

Remember that colleague who couldn’t attend after-work events because they had to be home with their kid? Small business employee benefits can help with parenting by offering devices and gear for monitoring newborns. With the right tools, HR teams can keep tabs on assets and check who has the baby monitor.

6. Promote Wellness Passes (That Don’t Mean Going to the Gym)

Canadian national parks made headlines when doctors started prescribing them to assist patients with their mental health. Small companies can offer wellness programs with benefits—such as an organized visit to a national park—that don’t require gym memberships.

The Best Small Business Employee Benefits are Those that Work

Your small business's differential advantages might come from voluntary benefits that only small companies with a flexible culture can roll out easily. In any case, you’ll only know which benefits work for your small company if you track their ROI or if you notice retention levels went up.

TalentHR, our all-in-one solution, allows HR professionals and business owners to gather metrics and people analytics. When you benchmark each team, you’ll start to understand what benefits your employees are most fond of. This makes it possible for you to refine your strategy and get the best ROI—and the best results. Register now for free.

Sign up now and explore TalentHR's benefits management tool for your small business needs.