As a business owner in Canada, you will often find yourself having to make decisions based on what is best for both your business and any employees you happen to have working for you. In order for a business of any size to grow and become a success, a lot of care and consideration needs to be taken when making these decisions. One consideration that is quite common among Canadian business owners happens to be whether or not it makes sense to offer employee benefits. To help you come to a decision that is in the best interest of both your company and the people that work for you, the team at Genesa has prepared a list of pros and cons associated with employee benefits.
Pros of Employee Benefits
Although employers are not required by law to provide employee benefits, plenty of companies throughout Canada both large and small see plenty of benefits from offering benefits. Examples of these benefits include the following:
Attract and Retain Higher Quality Workers
Plenty of companies are able to attract and keep workers with better skills, more experience and more reliable track records by offering attractive incentives like health benefits and retirement packages. People often prefer the peace of mind that comes with having these types of long term work benefits rather than short term salary bumps. It is also often the case that a worker will remain in a position that pays less with benefits, rather than leave to pursue other higher-paying positions.
Business owners can benefit greatly from the tax deductions that come with employee benefits. Group heath benefits in particular offer some lucrative tax incentives for employees. In addition to the tax savings that are available for the business, the owners can often save on the cost of their personal benefits if they are purchased through the business rather than privately.
Less Absences and Better Morale
Companies who have employees on things like health benefits and retirement savings plans often see less absences throughout the year. In addition, employers who offer benefits are often seen in a better light by their staff, which usually means higher morale and better productivity in the long run.
Cons of Employee Benefits
While the pros of employee benefits are significant, at the end of the day business owners need to make the right financial decisions that will keep the business viable for the future. In light of this fact, the cons of purchasing employee benefits need to be considered as well.
High Administrative Costs
Small business owners in particular can get burned by high administrative costs associated with employee benefits. This is because a smaller business will have less purchasing power compared to a large one, making their options for things like healthcare packages and retirement plans more limited. Also, more benefits will always mean higher costs.
Prices in the healthcare market in particular have been on a steady rise for the past few years, which has made it too expensive for a lot of smaller businesses. This rise in costs can also make it hard for businesses to forecast their expenses.
A mistake made on any employee benefit package can end up being costly in more ways than one. Owners will have to compensate their employees for any missed benefits, and they can be held legally responsible for the oversight, which can mean costly lawsuits in some cases.
At the end of the day, Canadian business owners require the right kind of information to help them make the best possible decision for their business, their employees and themselves. At Genesa CPA, we specialize in providing the insight and information that helps business owners be successful. For more information about how our accounting experts can help your business thrive in 2020, be sure to contact us today!