At what point do I need to offer benefits and think about using a payroll service?
I have a small team right now, but am hiring more people and might combine with another business. At what point do I need to offer benefits? Doing payroll is easy right now, but when should I outsource? Thank you.
If you're asking this question it isnt time yet. this is a question without a solid answer - you need to wait until you can't afford NOT to. You'll know! LOL - payroll will become impossible to do on your own and keeping people will become difficult without benefits. If its not there yet, don't spend the money!
Hey Kevin, regarding benefits...I think we should ask this question..."Why offer benefits?" Well along with your employees compensation it is part of a "Total Rewards" system that you should use to help attract and retain talent. You first need to come up with a compensation strategy..ie do you want to compensate employees at market, above market or below market. I think the right answer to this depends on your total marketing strategy..ie if you want to be known for the best products so you can charge a premium for those products then you probably want the best employees and you attract them by compensating above market. However if you just want your products to be the lowest cost product even sacrificing quality then having the best skilled employees may not be necessary. The easiest and most appreciated benefit to begin offering is paid time off. Employees love this because in the end they are working so that they can have a living..and living is time with family, friends and other loved ones outside of work. If you are under 50 employees you do not have to offer medical and I don't recommend doing it because it is expensive and quite frankly your employees may be able to find a better plan on the exchange. If your competition offers Medical plans maybe think about adding a few hundred dollars a month to each employee to help subsidies a health plan on the exchange. If you have more than 50 employees you should offer a Medical plan as it is mandated by ACA or you will pay expensive fines.
I don't offer Payroll services but I know companies that do. I tell my business clients to always outsource Payroll. It's the easiest thing to outsource, is cheap, and provides a lot of protection from mistakes that could cost you dearly. There is no magic time to offer benefits. I look at the business case for each company differently, including what they can afford, how easy it is to attract the right talent, turnover, fit with values, etc. I also recommend phasing in to benefits. Start with health as bare bones as allowed. Add other insured products as you can. Improve the health plan when you can afford it. Add 401k with no match. Add an end of they year profit sharing component. Add a match when you can afford it. Keep in mind though, time off, flexible scheduling, making work interesting (cross-training...) inclusion, and appreciation may get you further and cost far less than any benefit money can buy. Good luck!
Just remember, your people are your biggest asset in business. Too many businesses are forgetting that these days. If you do the right thing by your employees, they will be the same back to you and your business. And you will earn their loyalty ...not just on the surface, but deep down. And your business will be that much more successful in the long run.
There are a number of solutions out there for group benefits that depend on the type of business, number of employees, benefits provided and also depends on your geographic location. Look for comprehensive solutions that can scale with your business. And in seeking this solution, remember your objective. A payroll service like ADP, a PEO like Insperity or an in house HR professional who can customize benefits/packages with various vendors. Explore all.
as soon as you can start paying yourself a regular wage you should consider a payroll company. If you don't do that then you will have to track and pay and/or make estimates etc. to pay taxes. One little mistake will cost you. As long as you are making some money the payroll process is not expensive, it will also handle all your tax payments and life will be easier. I do have a selfish interest because we do payroll and HR and Benefits. We have CPA's that send their one and two person companies to us for that exact reason.
You can get benefits, the reason to offer them is often for competitive reasons. if you are trying to hire someone and they can get better benefits from some place else, if all things are equal why would they work for you?
Like someone said there are all kinds of benefits, the biggest you are thinking about is probably medical and/or dental. There are others also.
Great to hear your business is growing. Here are some suggestions to help you make the right call. Your question is somewhat two-fold, so let me break it down.
1. What point to offer benefits - To your existing/new staff or both?
2. When to outsource services - Accounting and Payroll?
Offering benefit to your staff (existing/new) has it's own immeasurable benefits and this should be built into the ethos of the company. After all, your employees/staff are your ambassadors. Their happiness and well being reflects on the business. And as @Taylor Ellwood puts it, "the sooner, the better". Developing employee benefits can be achieved at very low costs - and remember, it's not about the benefits, but rather the feeling of being valued and the loyalty trade off.
Payroll can be time consuming and at some point, will require a dedicated department/ accountant or tim to manage all of the processes efficiently. Calculate the cost of doing this yourself (i.e.; time, effort and resources) against what it would cost for a dedicated person/team or firm to do it. And as you clearly identified, this function of your business is likely to grow, especially if you're looking at a merger and/or taking on more staffing.
Hopefully, this helps you to reach the right decision.
Feel free to connect if I can be of further help.
Also remember that benefits are not just insurance. I've worked at companies that do random prize draws, group dinners out, offer free services (like help quitting smoking, inexpensive daycare) or college tuition assistance.
Free coffee is good, too.
When payroll takes up more time than its's worth then I would suggest outsourcing it. As far as offering benefits...I'd say the sooner the better because part of what attracts and keeps people with you is the benefits you offer. You can find some low cost or even no cost ways to include benefits.
Group Benefits can be offered with 2+ employees. There are several options available in terms of plan design, and cost. If you would like to look into what options would be available to you please contact our firm. There is no cost to you to have us take a look and make a recommendation.