(559) 684-1000

Close this search box.

Step-by-Step: How Small Businesses Can Offer Competitive Benefits

Importance of Employee Benefits

How can a small business offer benefits that not only attract but also retain top talent in today’s competitive marketplace? Here are key strategies:

  1. Flexible working arrangements
  2. Modern health insurance with mental health coverage
  3. No-cost perks like casual dress codes or Summer Fridays
  4. Unique benefits like company retreats or volunteer days
  5. Direct employee feedback

For a small business, offering competitive employee benefits is more than just a nice-to-have—it’s a crucial strategy for attracting and retaining talent. As per recent studies, employees place significant emphasis on the benefits they receive, often prioritizing them over salaries when choosing or staying with an employer.

Many small businesses are in a unique position to create benefits packages more tailored to their team’s needs, offering advantages that large corporations may struggle to match. Whether it’s through flexible working conditions or wellness initiatives, these benefits can build a loyal, productive workforce.

I’m Dalton Tigner, and for over three decades, my family-owned business, Tigner Financial, has helped small businesses navigate the complex world of employee benefits. Within this guide, I’ll share my expertise to show you how a small business can offer benefits that not only comply with legal standards but also give you a competitive edge.

employee benefits infographic - how can a small business offer benefits infographic brainstorm-4-items

Understanding Employee Benefits

Employee benefits are perks or compensation beyond basic wages. Think of them as the cherry on top of a paycheck sundae. They can define a company’s culture, boost its reputation, and drive business success. While some see benefits as an HR headache, with the right strategy, they can be a powerful tool for recruitment and engagement.

Types of Benefits

Employee benefits come in many shapes and sizes. Here’s a quick rundown:

  • Health Insurance: This is the cornerstone of most benefits packages. It covers medical expenses and offers security for employees and their families.
  • Retirement Plans: Options like 401(k) plans help employees save for their future.
  • Paid Time Off (PTO): Vacation days, sick leave, and personal days help employees maintain a work-life balance.
  • Wellness Programs: These include gym memberships, mental health support, and other initiatives to foster a healthier workforce.

Intangible Business Asset

Benefits aren’t just perks; they are intangible assets. Like a company’s reputation or industry expertise, benefits can shape the entire corporate culture. They impact how employees feel about their work and their employer.

For instance, offering flexible work hours can make employees feel valued and trusted. This can lead to increased loyalty and productivity.

“Benefits are more than just a paycheck booster. They are a strategic tool that shapes company culture and drives business success.” — Dalton Tigner, Tigner Financial

Impact on Corporate Culture

The benefits you offer can significantly impact your corporate culture. For example, wellness programs can create a healthier, happier workforce. Flexible work arrangements can foster a culture of trust and autonomy.

Case Study: A small tech startup offered remote work options and saw a 25% increase in employee satisfaction. This not only boosted morale but also reduced turnover rates.

HR Challenges

While benefits are essential, they come with their own set of challenges. Managing benefits can be complex and time-consuming. There are legal requirements to meet, costs to manage, and employee needs to consider.

However, these challenges can be overcome with the right approach. Using HR consultants or third-party administrators can simplify the process. They can help you navigate the complexities and ensure compliance with legal standards.

In the next section, we’ll delve into the legally required benefits for small businesses. Stay tuned to learn about Social Security, Medicare, and more.

Legally Required Benefits for Small Businesses

When running a small business, you need to know about the benefits you’re legally required to provide. These benefits ensure your employees are protected and your business stays compliant with laws and regulations. Let’s break them down:

Social Security and Medicare

Social Security and Medicare are federal programs that both you and your employees must contribute to. According to the Federal Insurance Contributions Act (FICA), you and your employee each contribute 6.2% of wages for Social Security and 1.45% for Medicare. These contributions help provide retirement income, disability benefits, and health insurance for employees when they reach 65 or face certain medical conditions.

Workers’ Compensation

Workers’ compensation protects both you and your employees if someone gets hurt or sick because of their job. It’s required in every state except Texas. This insurance covers medical treatment, lost wages, and rehabilitation. Rates vary depending on the type of work your employees do. For instance, an accounting firm will pay less than a construction company due to different risk levels. Learn more about workers’ compensation here.

Unemployment Insurance

Unemployment insurance offers financial support to workers who lose their jobs through no fault of their own. If an employee files a claim, you’ll be notified, and the funds will come from your unemployment account. The amount you pay depends on your state’s guidelines and a tax percentage on a base wage. This benefit is crucial for providing a safety net for your employees during tough times.


If you have 20 or more employees and offer group health insurance, you must comply with the Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA allows former employees and their families to continue their health insurance coverage for 18 to 36 months. However, the former employee must pay the entire premium, including the part you used to cover.

Family and Medical Leave Act (FMLA)

The Family and Medical Leave Act (FMLA) applies to businesses with 50 or more employees within 75 miles of the workplace. It requires you to provide up to 12 weeks of unpaid leave for certain family and medical reasons, such as childbirth or caring for a sick relative. While FMLA doesn’t cost you anything out of pocket, it ensures job security for your employees during significant life events.

State-Specific Requirements

Some benefits are required only in certain states. For example, disability insurance is mandatory in California, Hawaii, New Jersey, New York, Puerto Rico, and Rhode Island. This insurance provides income to employees who can’t work due to a serious nonwork-related injury or illness. Both short-term and long-term disability plans are available, covering a portion of employees’ income while they’re away from work.

Understanding and providing these legally required benefits is essential for your small business. They not only ensure compliance with laws but also help protect your employees and build a supportive work environment.

Next, we’ll explore how small businesses can offer competitive benefits beyond the mandatory ones. Stay tuned to learn about health insurance options, retirement plans, and more.

How Can a Small Business Offer Benefits?

Offering benefits as a small business might seem daunting, but with the right strategies, you can provide a competitive package that attracts and retains top talent. Let’s break it down step-by-step.

Health Insurance Options

Health insurance is a cornerstone of any benefits package. Here are some options:

  • Group Health Insurance: This is a basic must-have. It shows employees you care about their well-being. Group plans can be more affordable than individual plans and offer comprehensive coverage.

  • Medical FSA, HRA, and HSA: Flexible Spending Accounts (FSAs), Health Reimbursement Arrangements (HRAs), and Health Savings Accounts (HSAs) help employees cover medical expenses with tax-free dollars. Pairing these with high-deductible plans (HDHPs) can also reduce costs.

  • ACA Requirements: If you have 50 or more employees, the Affordable Care Act (ACA) requires you to offer health insurance. Even if you don’t, it’s a popular benefit worth exploring.

  • Small Business Healthcare Tax Credit: Small businesses can get tax credits for offering health insurance, making it more affordable to provide this essential benefit.

Retirement Plans

Retirement plans are crucial for long-term employee satisfaction and financial security:

  • SEP-IRA: Simplified Employee Pension IRAs are great for small businesses due to low administrative costs. Employers can make tax-deductible contributions to employees’ retirement accounts.

  • SIMPLE IRA: The Savings Incentive Match Plan for Employees IRA allows both employer and employee contributions. It’s designed for businesses with 100 or fewer employees.

  • 401(k) Plans: These are popular and often include employer matching contributions. They encourage employees to save for retirement and show that you invest in their future.

Paid Time Off and Leave Policies

Paid time off (PTO) is essential for maintaining a healthy work-life balance:

  • Vacation Days and Sick Days: Offering paid vacation and sick leave is a great way to ensure employees take time to recharge and stay healthy.

  • Personal Leave and Paid Holidays: Personal leave days and paid holidays are additional perks that can make your benefits package stand out.

  • FMLA Compliance: If you have 50 or more employees, the Family and Medical Leave Act (FMLA) requires you to provide unpaid leave for certain family and medical reasons. Even if not required, offering similar leave can be beneficial.

Flexible Work Arrangements

Flexibility is highly valued by employees today:

  • Remote Work and Hybrid Schedules: Allowing employees to work from home or have a mix of remote and in-office days can greatly improve job satisfaction.

  • Flexible Hours and Compressed Workweek: Offering flexible working hours or a compressed workweek (e.g., four 10-hour days) can help employees balance their personal and professional lives.

  • Mental Health Days: Recognizing the importance of mental health, some companies offer specific days off for mental well-being. This can reduce burnout and improve overall employee satisfaction.

By strategically choosing and implementing these benefits, small businesses can create a competitive and attractive package that meets the diverse needs of their employees.

Next, let’s explore additional benefits to consider, like dental and vision insurance, life insurance, and wellness programs.

Additional Benefits to Consider

To truly stand out and attract top talent, small businesses should consider offering a range of additional benefits. These benefits not only address employees’ basic needs but also enhance their overall well-being and job satisfaction.

Financial Wellness Programs

Financial wellness programs can make a big difference in employees’ lives. These programs help employees manage their finances better, leading to less stress and more focus at work.

  • Financial Education: Offer workshops on budgeting, saving, and investing. PwC found that financial literacy programs can significantly improve employees’ financial well-being.
  • Loan Repayment Plans: Help employees tackle student debt. This benefit shows you understand their challenges and are willing to support them.
  • Tuition Reimbursement: Encourage continuous learning and skill development. This not only benefits employees but also enhances your company’s overall skill set.
  • Equity Compensation: Offering stock options aligns employees’ interests with business goals, fostering a sense of ownership and commitment.

Mental Health and Wellness

A focus on mental health and wellness can improve employee satisfaction and productivity.

  • Employee Assistance Programs (EAPs): Provide confidential, 24/7 access to trained professionals and counselors. EAPs can help employees with various stressors, from anxiety to relationship issues.
  • Social Perks: Organize social activities to help employees bond and feel part of a community. This can combat feelings of isolation and improve mental health.
  • Wellness Programs: Encourage healthy behaviors through exercise classes, health screenings, and mental health days. These programs can lower healthcare expenses for both employees and employers.
  • Flexible Work Schedules: Offer remote work options, flexible hours, and compressed workweeks. This flexibility helps employees balance work and personal responsibilities, reducing burnout.

Fringe Benefits

Fringe benefits are optional but can significantly enhance your benefits package. They show that you care about your employees’ well-being beyond just the basics.

  • Dental and Vision Insurance: Routine exams can catch health issues early. Offering these plans can improve overall employee wellness and productivity.
  • Life Insurance: Provide peace of mind with group life insurance. This is especially valuable for employees with dependents.
  • Disability Insurance: Short-term and long-term disability insurance can offer financial protection in case of illness or injury.
  • Dependent Care FSA: Allow employees to set aside pre-tax earnings for childcare or eldercare expenses. This can reduce their annual tax obligation.
  • Gift Cards: Recognize a job well done with gift cards to restaurants, grocery stores, and gas stations. This can boost morale and motivation.
  • Paid Volunteer Days: Show your commitment to the community by offering paid days off for volunteering. This can help employees fulfill a greater sense of purpose.
  • Memberships and Passes: Offer passes to museums, sports events, or gym memberships. These perks can help employees enjoy life off the clock.

By integrating these additional benefits into your package, you can create a supportive and attractive workplace. These benefits show that you value your employees’ well-being and professional growth, setting your small business apart as an employer of choice.

Next, we’ll discuss how to implement and manage these benefits effectively.

How to Implement and Manage Benefits

Implementing and managing benefits can seem daunting, but it’s crucial for attracting and retaining top talent. Here’s a step-by-step guide to help you navigate this process.

Employee Communication

Clear communication is key to the success of your benefits program. Develop a detailed plan that outlines how benefits will be communicated to your team. This could include:

  • Informational Meetings: Host regular meetings to explain the benefits and answer any questions.
  • Detailed Handouts: Provide easy-to-understand handouts that summarize the benefits.
  • Company Intranet: Use a dedicated section on your intranet for benefits information.

Example: A small tech startup found that quarterly benefits workshops increased employee understanding and utilization of their benefits by 30%.

Total Compensation Summary

When discussing compensation, consider the total compensation approach. This means showing employees the full value of their pay, including benefits. This can include:

  • Salary
  • Health Insurance
  • Retirement Contributions
  • Paid Time Off
  • Other Perks

Example: A small marketing firm used total compensation statements to highlight the value of their benefits, leading to a 15% increase in employee satisfaction.

Benefits Administration

Administering benefits involves several tasks, such as adding beneficiaries, processing claims, and organizing wellness initiatives. Small businesses can streamline this process by:

  • Using Benefits Administration Software: This technology can manage enrollments, changes, and updates efficiently.
  • Self-Service Portals: Allow employees to manage their benefits, reducing the administrative burden.

Example: A small retail business implemented benefits administration software and saw a 40% reduction in administrative tasks.

Third-Party Administrators (TPAs)

Many small businesses outsource plan management to TPAs. These consultants or companies manage every aspect of health plans and other employer benefits. TPAs like Sana can offer several advantages:

  • Expertise: They stay up-to-date with the latest trends and regulations.
  • Efficiency: They handle complex administrative tasks, freeing up your time.
  • Cost-Effective: They can help you find competitive and compliant benefits packages.

Example: A small construction company partnered with a TPA and was able to offer more comprehensive health benefits without increasing costs.

HR Outsourcing

For small businesses with limited HR resources, outsourcing HR tasks can be a game-changer. HR outsourcing firms can manage:

  • Payroll
  • Benefits Administration
  • Compliance

This can save time and ensure that all legal requirements are met.

Example: A small law firm outsourced their HR functions and saw a 25% increase in efficiency, allowing them to focus more on their core business.

By following these steps, you can effectively implement and manage a benefits program that meets your employees’ needs and aligns with your business goals. Next, we’ll explore some frequently asked questions about small business benefits.

Frequently Asked Questions about Small Business Benefits

What benefits are mandatory for small businesses?

Small businesses must provide certain benefits by law. These include:

  • Social Security and Medicare: Funded by the Federal Insurance Contributions Act (FICA), these benefits offer retirement, disability, and survivor benefits to employees.
  • Workers’ Compensation Insurance: This provides financial support to employees who get injured or sick due to their job. It’s generally required for all employers.
  • Unemployment Insurance: This offers financial protection to employees who lose their job without substantial proof of cause. Employers pay for this through federal and state payroll taxes.

State-specific requirements may include additional benefits like disability insurance or family leave. Always check local laws to ensure compliance.

How much do benefits cost for a small business?

The cost of benefits can vary, but here are some average costs per hour worked for private industry employees, according to the Bureau of Labor Statistics:

  • Health insurance: $2.94
  • Paid leave: $3.26
  • Retirement plans: $1.07
  • Workers’ compensation: $0.43
  • Social Security and Medicare: $2.57

Some benefits, like flexible work arrangements, may have minimal costs but offer high value to employees. For example, offering remote work options can save on office space and utilities.

How can small businesses manage benefits administration?

Managing benefits can be complex, but there are ways to simplify the process:

  • Use Benefits Administration Software: Tools like Paychex Flex® can integrate benefits administration with payroll processing, reducing administrative burdens.
  • Outsource to Third-Party Administrators (TPAs): TPAs like Sana can manage health plans and other benefits, ensuring they are competitive and compliant with regulations.
  • Employee Communication: Regularly educate employees about their benefits to ensure they use them effectively. A total compensation summary can help employees see the value of their benefits.

Example: A small tech startup used benefits administration software to streamline their processes. This allowed them to focus more on innovation and less on paperwork, resulting in higher employee satisfaction and retention.

By addressing these frequently asked questions, small businesses can better understand how to effectively manage and compete with their employee benefits offerings, ensuring they attract and retain top talent while managing costs.

Next, we’ll delve into additional benefits to consider beyond the basics.


Offering employee benefits is not just a nice-to-have; it’s a strategic necessity for small businesses aiming to attract and retain top talent. Benefits show that we value our employees’ well-being and future, turning jobs into careers and workplaces into communities.

Strategic Advantage

In today’s competitive job market, a well-crafted benefits package can set us apart from larger corporations. It helps us:

  1. Attract Top Talent: Candidates often weigh benefits heavily when choosing a job. A comprehensive package can be the deciding factor.
  2. Retain Employees: Benefits contribute to employee satisfaction and loyalty, reducing turnover and the costs associated with hiring and training new staff.
  3. Boost Productivity: Healthy and financially secure employees are more focused and productive.

Securing Financial Futures

At Tigner Financial, we understand the importance of securing both the present and future financial well-being of our employees. Offering retirement plans like SEP-IRA, SIMPLE IRA, or 401(k) can significantly reduce stress and improve workplace productivity.

Expertise in Whole Life Insurance

One of our cornerstone offerings is whole life insurance. This not only provides financial security for employees’ families but also serves as a long-term financial asset. Whole life insurance can be a key component of a benefits package, offering peace of mind and financial stability.

Partnering with Tigner Financial

Creating a benefits package might seem daunting, but we’re here to help. Our expertise ensures that even on a tight budget, we can provide a competitive and comprehensive benefits package. By investing in our employees, we invest in our company’s success.

For more insights and to explore how we can assist you in building a standout benefits package, visit our small business employee benefits page.

In conclusion, offering thoughtful and comprehensive benefits is crucial for employee satisfaction and retention. Partnering with Tigner Financial ensures your small business thrives for years to come.