We know that the accounting and tax issues involved with employer-provided benefit plans can be overwhelming. That’s why we can assist with the accounting and tax issues of development and implementation of your employee benefit plan. In addition we work with several third-party administrators that will assist in the administration of the plan. Now is the time to begin preparing your employee benefit plan for open enrollment which is a quick 45 days from November 1st through December 15th.
To stay competitive employers must invest in a comprehensive Employee Benefits plan to attract and retain talent. When employees are offered the benefits they most desire they’ll feel valued will miss fewer workdays and will be less likely to quit. Open Enrollment is quickly approaching and you need to be aware of all the adjustments that your benefits have. Here are some essential tips for employee benefits plans and how Lindemeyer CPA can help.
Employee Benefits Required By Law
The law requires employers to provide employees with certain benefits including:
- Time off to vote serve on a jury and serve in the military.
- Comply with all workers’ compensation which is insurance that covers employment-related injuries and illnesses.
- Withhold FICA taxes from employees’ paychecks and pay your own portion of FICA taxes. This provides employees with retirement and disability benefits.
- Pay state and federal unemployment taxes which provides benefits for unemployed workers.
- Contribute to state short-term disability programs. More information can be found on Kentucky’s Health and Family Services website.
- Comply with the Federal Family and Medical Leave (FMLA) which is designed to help employees balance their work and family responsibilities by allowing them to take reasonable unpaid leave for certain family and medical reasons.
There are also things that you are not required to provide including health dental and vision plans as well as paid holidays and time off. If you don’t provide highly valued benefits like health insurance and paid time off though you won’t be nearly as desirable as other companies that do and you might find that your employees are jumping ship to your competitors.
Avoid Costly Mistakes by Partnering with Lindemeyer CPA
The above employment taxes are required by law and should be taken into account when preparing your personnel budget which should include allowances for FICA unemployment and Medicare taxes. Worker’s compensation is required but the rate depends on the category of your employee. For clerical positions the tax is about 0.3% of salary but for manufacturing positions it goes up to about 7.5% because of potential for injury.
Basic salary and employment taxes are the bare minimum. To hire and retain better talent benefits will need to be provided. Typical benefits include life and health insurance but many employers also offer dental and vision plans to provide employees with a comprehensive insurance package of which it is essential to budget for. Basic salary employment taxes and benefits are typically 1.25 to 1.4 times the base salary. So if an employee has a $50000 yearly salary the final cost range could be between $62500- $70000 total.
The details matter and unfortunately it can be easy to make mistakes when creating a compliant benefits plan. The IRS and U.S Department of Labor can spot any behaviors that do not comply and those mistakes can quickly become very expensive. You can save money upfront by making sure you are compliant by partnering with us. We can mitigate the accounting and tax issues involved with employer-provided benefit plans. Contact us to see how we can help you get a headstart on developing and implementing your employee benefits plan.