Many startups and small businesses think offering their employees a 401(k) plan isn’t in the cards. The budget is tight, most startups think they’re too small, and they don’t think they can afford the administrative care.
This is no longer true. It is possible for your startup to provide a retirement savings plan, and it can be affordable.
In this article, we look at why startups should offer retirement plans to their employees.
You’ll Attract Top Talent
You’re more likely to recruit and hire the best team if you have benefits to offer them.
Top-notch employees are vital to the success of your startup, and if providing them with retirement benefits helps recruit them, it’s a win-win for your business.
We live in a job hunters’ market, and they’re calling the shots. One of the things today’s employees want is a 401 (k) plan.
Some small businesses even find that they have a higher employee churn rate when they don’t offer a retirement plan. So, it can only bring you better employee retention rates by offering one.
Turnover is expensive, so if you can save money on the recruiting, hiring, and on-boarding process, you’ll save money by offering retirement plans.
You Need a Retirement Plan, Too
A 401 (k) plan is beneficial for you as well. After all, you need to save money for retirement.
You will be better prepared for retirement by creating a retirement plan for your startup. Educate yourself and be sure to pick the right plan for both you and your team members.
Your Startup Can Be More Competitive
With many small companies not offering a 401 (k) plan for their employees, you are uniquely poised to be more competitive in the marketplace.
So, if you are in a highly competitive job market, you should consider offering a retirement plan as part of your overall benefits package.
This helps set yourself apart from the competition and other startup employers and again hire the best talent.
There are Tax Deductions for Employers
Did you know that when you contribute to your employees’ plans, you can take a tax deduction? In fact, every dollar you contribute to your teams’ 401(k) plans is tax deductible.
While there is a cap on the amount you can offer, you still have a great opportunity for tax savings. You reduce your taxes that both you and your employees have to pay.
You can see that by contributing to your employees’ plans you have a win-win for you and your team members.
401 (k) Plan Costs are Reasonable
You’ll find pricing available that fits your budget and the size of your company. It’s no longer a one-size-fits-all scenario.
You can expect to pay an ongoing administration fee and record keeping cost. You’ll also find other expenses as part of your investment expenses. For many small businesses, this can be less than $1000 each year.
Do a little internet research, ask questions and compare. This is a good way to find a good plan that fits your startup, your needs, and your budget.
Final Thoughts
Offering retirement plans to your employees is a must for your startup. Not only does it help you attract an retain top talent, but it helps you be competitive in the job market.
In addition, offering an employer sponsored retirement plan reduces your employees’ taxable income as well as your business income.
You’ll find the savings and the benefits helpful for your growing business. Just be sure to find an expert to manage it for you that you trust.
Are you a new startup ready to succeed? Are you looking to get your new business off the ground and watch it rise to success? We are here for you. We can help answer your questions and guide you through the process. Outsource your HR duties, finances, payroll and more to us. Contact Escalon today to get started.
Image: Harli Marten on Unsplash
