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Employee Benefits - 5 Advantages for Small Business

Written by: Christina Merhar
August 11, 2015 at 12:00 PM

For a small business, keeping employees happy and productive is a key ingredient to success. While there are different ways to accomplish this, an employee benefits package is one place to start.

Employee benefits may encompass any number of components including health benefits, retirement savings accounts, and low-cost perks. Yes, employee benefits add to overhead costs, but there are measurable advantages as well. 

Advantages of Employee Benefits

Here are five advantages of offering employee benefits, even on a small business budget.

1. Recruit and Retain Key Employees

Let’s face it. In today’s workforce, employees value - and expect - an employer to offer benefits. Often, employees will accept better benefits in lieu of a higher salary, which can be a way for smaller businesses to compete with larger employers. The idea here is that having an attractive employee benefits package helps get top candidates in the door and helps you retain them in the long-term.

2. A Healthy Workforce is a Productive Workforce

Employee benefits provide your workforce with tools to remain healthy and productive. This is an advantage for the business and employees.

For example, providing employees access to quality healthcare, and contributing to the cost, removes a big financial burden for employees and their families. Offering health benefits can also lead to fewer sick days and unplanned absenteeism. These are measurable returns on the business investment.

3. Culture and Morale

As a small business owner, it is common to have close working relationships with your employees. As such, many small businesses want to take care of their employees by offering benefits. When it comes to culture and morale, employees feel this reciprocity. Knowing the business cares for their health and well being creates employee loyalty and contributes to a positive workplace culture.

4. Tax Advantages

Many employee benefits are tax-advantaged for both the business and employees. It's not just contributions to healthcare and retirement plans that are tax-free. Several other types of employee benefits are tax-free including life insurance, tuition reimbursement, childcare reimbursement, cafeteria plans, employee discounts, personal use of a company owned vehicle, cell phones, and meals provided at the workplace.

5. A Foundation for Growth

A final advantage of employee benefits is they set the foundation to scale and grow. As you begin to hire more employees, having a unique and attractive employee benefits package helps your business attract, hire, and keep the best employees.


For most small businesses, there comes a time when it is more expensive not to offer employee benefits than to offer them. Once your small business reaches this tipping point, the advantages such as recruiting, retention, cost-savings, and positive culture become important ingredients for business growth and success.

What advantages of employee benefits would you add? What questions do you have? Leave a comment below.

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Topics: Health Benefits