The Importance of Employee Benefits for Small Businesses

Written by: PeopleKeep Team
Originally published on December 26, 2014. Last updated April 15, 2022.

Small businesses all over the country understand the importance of employee benefits. Why? Employee benefits allow businesses to recruit and retain top-talent employees, add to a positive company culture, and make employees healthy and happy. Here’s a breakdown of how employee benefits can make your small business more fruitful.The Importance of Employee Benefits for Small Businesses

What are Common Employee Benefits?

Though employee benefits vary from one company to the next, here are some common examples:

  • Healthcare

  • Workers Compensation

  • Social Security Taxes

  • Vacation and holiday time off

  • Retirement Plans

  • Individual Retirement Account (IRA)

  • Workplace Perks


Being a small business owner means that you probably have taken part in hiring and recruiting. This can be time-consuming, but is entirely essential to your success. As such, offering employee benefits to potential candidates will give you a solid foundation.

As candidates are interviewing with your company, many of them will want to know what benefits you offer. In the case of healthcare, if you offer group health insurance, you’ll likely tell them what is covered under your employer-sponsored plan. If you offer other healthcare benefits such as premium reimbursement for individual healthcare, you can emphasize the 20 to 60 percent savings over traditional group health insurance, along with the ability to choose their own plan.  

You can use your small business’s health benefits as a tool to recruit potential candidates.  If your company has unique benefits such as floating holidays or recruiting bonuses, they should be emphasized as additional appeal to your health benefits.


Once you have learned that you can use your employee benefits as a recruiting tool, you’ll be happy to know they will help you save money as well - it’s a win win situation. So, how do you save money with the benefits you offer? Think of it this way, the cost of hiring and replacing employees is expensive. If you do not have to hire employees as often, you’ll save on hiring and training costs.

Some studies predict that every time a business replaces a salaried employee, it costs 6 to 9 months’ salary on average. For a manager making $40,000 a year, that's $20,000 to $30,000 in recruiting and training expenses. Offering great employee benefits to your employees will keep them around and save time and money.  


Focusing on company culture is not just for the "big dogs." It is something that small business owners should focus on also. Because whether you intentionally create a company culture or not, you have one. And it's much easier to mold company culture when you're still small and growing.

The importance of employee benefits and company culture go hand in hand and the benefits you offer your employees become part of your company’s culture. As such, it’s important that employee benefits reflect your employee’s needs.

Employee Happiness

And finally, employee benefits can give your employees a reason to feel happy and valued. Offering paid holidays, healthcare benefits that save them money, retirement plans, and many others are a way to not only recruit and retain, but to show your employees that they are invaluable.

What is the importance of employee benefits to your small business? How have they helped you to recruit and retain employees? Comment below and leave your insight.

The Comprehensive Guide to the Small Business HRA 

Originally published on December 26, 2014. Last updated April 15, 2022.


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