One of the most confusing aspects of becoming a Central Florida Small Business owner is gaining an understanding about all things related to employee benefits. Are you required to offer certain benefits to your employees? If so, what benefits are you required to offer? As you become a seasoned small business owner and your business becomes more profitable, you may decide to offer optional benefits to reward your employees. The option to participate in a 401(k) savings plan. Before you proceed, familiarize yourself with the these three common small business owner’s myths about 401(k)s so you don’t buy into them.
You Cannot Afford to Offer A 401(k)
Years ago that may have been true. Today, though most businesses with 10 or less employees can create a plan for just a few hundred dollars. The cost to maintain that plan is typically less than $100 per month. Technology has had some affect in this cost savings. If you’re still on the fence about paying even that amount, consider this: many business owners reap a greater tax benefit from setting up the plan than they pay to set it up.
It’s Risky for a Business Owner to be in Charge of a 401(k)
Again, times have changed. Years ago, financial advisors left it up to small business owners to choose 401(k) plan for their businesses. If the plan fell apart, the owner would be liable for the losses. Today plan providers oversee the plan and make changes if a plan seems to be fizzling.
I Can’t Afford to Match My Employees’ 401(k) Contributions
The perception that employers must match employee contributions is false. Employers are not required to provide matching funds. According to an article in Financial Advisor magazine, in fact, each year fewer companies are matching employee contributions because they are trying to save money. For employers who can afford to match contributions those funds are tax deductible. While matches are often a win-win for employers and employees, they are not required.
If you’d like expert advice about some of the necessary but perplexing administrative responsibilities of owning a small business, we can help with one important one. Contact us at Newman Crane & Associates Insurance, (407) 859-3691, for skilled help with all of your business insurance needs.