How to Create a Benefits Package

September 7, 2007 4:02 PM

How does one develop a benefits package when starting a new business?

I am in the process of writing a business plan for a yoga studio and I would like to have a benefits package (health/dental/paid vacation, etc) How does one go about developing such a package. Are there pre-designed plans available.

Lastly, should benefits even be offered. I read some books awhile back that encouraged employees to work free-lance, be responsible for their own health-care, etc. and ask for what the business wants to offer as benefits to be instead added to salary.

posted by goalyeehah to work & money (5 comments total)

For small employee groups, employer benefits (if you're going it alone, instead of through some trade association) are generally prohibitively expensive. You can get in touch with benefits consultants (many of whom are really just commercial insurance agencies, but some of whom purport to be paid "consultants" putting your interests first, for a fee). Many "benefits" such as employee discount cards, and trade-outs with other area businesses can cost you little or nothing, through programs run by your local Chamber of Commerce.

Cover your legal liabilities as an employer (workmen's comp, extended liability and casualty coverage, business discontinuity, etc.) before spending money on other employee benefits. After all, being able to continue to offer employment, after an insurable problem, is the best "benefit" you can provide, to most working people. Beyond that, consider employee leasing, through employment agencies, as a road to providing benefits, if you're committed to that.
posted by paulsc at 4:18 PM on September 7, 2007 [1 favorite]

As paulsc says, employee leasing, also known commonly now as co-employment, is a quick and easy way to get a company up an running with a full benefits package and minimum hassle. I've used it on and off (more on than off), for 13 years in my business.

You and your employees are lumped in with all the other employees of the co-employer, which lets them buy coverage on a larger group of people and offer a wider range of benefits. They handle your payroll, tax payments and filing requirements, benefits administration, HR issues, compliance, COBRA admin, and on and on an on.

With most that I'm aware of you'll need a minimum of 5 employees for them to bother looking at the account. You'll pay a percentage of your gross payroll, probably 10% to 20%, to cover FICA, FUTA, SUTA, Work Comp and their administration fee. On top of that you would pay separately for any benefits contributions you want to make. If you talk to a rep, they should be able to give you an idea what comparable businesses are offering, but will typically require that you as the employer contribute at least 50% of the single employee medical cost. Anything beyond that is up to you.

Be forewarned when looking for insurance that your likely employee demographic (females 18-35) is probably one of the most expensive to cover.
posted by JohnYaYa at 6:07 PM on September 7, 2007 [1 favorite]

(Likely employee demographic also being most likely to have babies - thus actually use the plan you've bought for them.)
posted by pomegranate at 4:47 AM on September 8, 2007

I do consulting for a company who provides this kind of service. They're an insurance broker, and they specialize in providing affordable coverage for small businesses. Let me tell you, a harder working group of people I have never seen. They bend over backwards to give good service.

The industry seems to have its stereotypes, but in my experience there's at least one company that's trying to do the right thing.

You appear to possibly be in the Southern California area. This does happen to be where they do business; if you're interested in the idea drop me a line and I'll get you in touch with them.
posted by RikiTikiTavi at 11:16 PM on September 8, 2007

Actually, oddly enough there's a small yoga studio just on a nearby corner (used to be a gas station, oddly enough) that looks like it's doing well--they've only been around maybe 6 months or so. I could always ask them!
posted by RikiTikiTavi at 11:18 PM on September 8, 2007