Attracting and retaining top talent isn't just about offering competitive salaries in today’s labor market. Many stellar job candidates are looking for employment benefits beyond the traditional salary and basic healthcare package. Small businesses are in the perfect position to provide these types of fringe benefits and other perks.  

Read on to learn how to create a benefit package that will appeal to top-tier job candidates regardless of the size of your organization.  

Before building your benefits package, study the market 

It's important to understand which benefits matter to your workforce. In a recent Market Pulse Study from ADP Commercial Insights, owners of small and mid-sized businesses provided the following breakdown of what they consider "extremely" and "very important" benefits to attract new employees: 

1. Learning and development (83%) 

2. Flexible work hours and scheduling (81%) 

3. Mental health counseling (78%) 

4. Paid family and medical leave (78%) 

5. Financial wellness resources (73%) 

6. Education subsidies/tuition reimbursement (73%) 

7. Working remotely full-time (72%) 

8. Formal mentoring program (68%)  

9. Career and life coaching (68%) 

To hone this list for your own business, ask your current team which benefits they find most important or would like to see you offer in the future. You can also ask your potential candidates which benefits are the most important to them if you are going to offer a menu of benefits at your company. 

The basic building blocks of small business benefits  

Every effective benefits strategy begins with core offerings that address fundamental employee needs, such as: 

1. Affordable health insurance options  

Employer-sponsored health care is the mainstay of employee benefits in the United States. However, this can also become cost-prohibitive for small businesses.  

Remember that businesses with fewer than 50 employees, by law, do not have to offer health insurance but may receive significant tax credits for doing so.  

These affordable options may help your small business offer competitive healthcare benefits to top talent.  

• The Small Business Health Options Program (SHOP) marketplace plans are designed specifically for small employers. 

• Health Reimbursement Arrangements (HRAs) that allow you to reimburse employees for individually purchased health insurance. 

• Level-funded plans that combine the predictability of fully insured plans with the potential savings of self-funding. 

Implementation tip: Work with a benefits broker who specializes in small businesses to find the most cost-effective solutions for your company's size and budget. 

2. Retirement planning and saving 

Helping employees prepare for the future using these and other retirement planning tools builds loyalty while providing tax advantages. 

• Set up a SEP IRA if you want simplicity with generous contribution limits. 

• Establish a SIMPLE IRA for easy administration with employee contribution options. 

• Consider a 401(k) plan with a modest matching contribution to maximize retention value. 

• Explore state-sponsored retirement programs that minimize administrative burdens. 

Implementation tip: Providing automatic enrollment at a default contribution rate (with opt-out option) dramatically increases participation and helps employees build retirement security. 

3. Paid Time Off (PTO) 

Strategic PTO policies balance employee wellbeing with business needs by providing a bank of days that employees can take away from work at their own discretion. Here are best practices that can help offer PTO effectively: 

• Start with a modest but competitive package that includes vacation, sick time, and personal days. 

• Consider a PTO bank approach that gives employees flexibility in how they use their time. 

• Implement floating holidays that allow employees to honor cultural or personally significant days. 

• Create a sabbatical program for long-term employees (even a modest one-week sabbatical after five years can boost retention). 

Implementation tip: Be explicit about expectations for communication during time off to ensure employees actually disconnect and recharge. 

Tap into tax-advantaged fringe benefits 

Many fringe benefits offer significant tax advantages for both employers and employees. Here are three that you can add to your small business benefits offering: 

1. Health Spending Accounts 

These accounts help employees manage healthcare costs while reducing taxable income: 

• Health Savings Account (HSA) for businesses offering High Deductible Health Plans. 

• Flexible Spending Account (FSA) for medical expenses regardless of health plan type. 

• Dependent Care FSA for employees with children or elder care expenses. 

Implementation tip: Contribute a modest amount to employee HSAs as an incentive to participate, creating both goodwill and encouraging preventative healthcare. 

2. Transportation benefits 

Transportation benefits are a win-win for small businesses and their employees, helping them manage commuting costs while reducing payroll taxes: 

• Transit and parking pre-tax benefit programs allow employees to use pre-tax dollars for commuting expenses. 

• Bicycle commuter benefits such as secure storage, maintenance stipends, or shower facilities. 

• Electric vehicle charging stations as a forward-looking benefit that attracts environmentally conscious talent. 

Implementation tip: Survey employees about their commuting patterns before implementing these or other transportation benefits to ensure you're addressing actual needs. 

3. Education Assistance 

Invest in employee development with tax-advantaged education benefits: 

• Tuition reimbursement programs (up to $5,250 annually can be excluded from employee income). 

• Student loan repayment assistance to help employees address existing education debt. 

• Professional development allowances for certifications and continuing education. 

Implementation tip: Align educational assistance with skills your business needs to create mutual benefit while improving retention. 

Work-life balance benefits: The new essentials 

In today’s talent market, ADP’s research study shows that employees increasingly prioritize benefits that support balanced lives. Here are some quick wins to help you add these and other work-life balance benefits to your offering. 

1. Flexible work arrangements 

Flexibility has become a top priority for job seekers. Consider the following: 

• Remote work options for both full-time and hybrid schedules. 

• Flexible scheduling that allows employees to adjust start/end times. 

• Compressed workweeks such as four 10-hour days instead of five 8-hour days. 

• Job sharing arrangements that allow two part-time employees to fulfill one position. 

Implementation tip: To truly make flexible work arrangements work for your business, be sure to create clear communication protocols and performance metrics to ensure flexible arrangements maintain productivity. 

2. Family-friendly benefits 

Supporting employees' family responsibilities is another increasingly attractive benefit for many workers because they can reduce stress and improve focus: 

• Parental leave for both primary and secondary caregivers. 

• Childcare assistance through subsidies or emergency backup care services. 

• Family-focused health insurance with comprehensive dependent coverage. 

• Adoption and fertility treatment assistance. 

Implementation tip: Even modest family benefits signal that you value employees' whole lives, not just their work contributions. If you do not offer these types of benefits now, consider incorporating them into your small business benefits package in the future. 

3. Wellness programs 

Proactive wellness initiatives reduce healthcare costs while boosting morale: 

• Mental health resources including Employee Assistance Programs (EAPs). 

• Fitness stipends or discounted gym memberships. 

• Preventative health screenings. 

• Stress management and mindfulness programs. 

Implementation tip: Focus on creating a culture of well-being rather than individual programs. Ensure managers model healthy behaviors and respect boundaries. 

Stand out from the crowd with a creative, cost-effective benefit package  

Not all valuable benefits require significant financial outlay. It is often the most creative and cost-effective benefits that can help distinguish your small business in the job market. Consider some of these options: 

1. Professional growth opportunities 

Invest in employee development beyond formal education: 

• Mentorship programs that pair junior staff with experienced team members. 

• Cross-training initiatives that expand employee skills and create backup capacity. 

• Leadership development tracks for promising team members. 

• Industry conference attendance on a rotating basis among team members. 

Implementation tip: Create individualized development plans during performance reviews to align growth opportunities with employee aspirations. 

2. Recognition programs 

Acknowledge contributions in meaningful ways: 

• Spot bonus programs for exceptional performance. 

• Peer recognition platforms where employees can highlight colleagues' contributions. 

• Anniversary celebrations that mark employment milestones. 

• Results-based incentives tied to specific business outcomes. 

 Implementation tip: Make recognition specific, timely, and aligned with your company values for maximum impact. 

3. Daily work-life perks 

Small touches can significantly improve workplace satisfaction. Don’t underestimate the power of these perks to improve morale and create a workplace that attracts high performers: 

• Quality break room refreshments including good coffee and healthy snacks. 

• Casual dress policies where appropriate for your business. 

• Pet-friendly office policies and "bring your dog to work" days. 

• Company-sponsored social events that build team cohesion. 

Implementation tip: Involve employees in selecting these perks to ensure they align with actual preferences rather than assumptions. 

Go beyond traditional benefits to attract top talent  

In many labor markets, small businesses are struggling to fill their need for capable and loyal employees. A thoughtfully designed benefits package incorporating the benefits above offers incentives that attract valuable employees and can help employers build a thriving team instead of constantly struggling with team turnover. 

Do you have questions about the tax and financial implications of offering these employee benefit programs in your small business? Contact our firm to discuss them.