Looking for a way to offer no cost benefits to your employees and save a lot of taxes at the same time? Many of us have seen and heard the AFLAC duck, but let’s take a quick look at how this is a win-win situation for your company and your employees and not just a lot of “quack”!
Lets look at some of the advantages:
First consider that you are able to offer valuable benefits that your employees need at absolutely no cost to your company. This results in a stronger bond between your company and your employees. Any employer, especially small business, trying to offer any benefits in today’s world sets themselves apart from their competition. From the employee perspective they are able to gain valuable benefits they cannot get elsewhere for typically only a few dollars a week. Also, there are no administrative burdens to the employer – they are all handled by AFLAC.
The next advantage is tax savings to both the employer and the employee, which is a win-win.
Let’s start by looking at the tax advantages for the employer. If the annual payroll for your company is $500,000, your FICA (Social Security and Medicare) costs are 7.65% or $38,250. Having the employees first deduct the cost of this insurance (lets assume this amount is $50,000) saves your company $3,825 per year!
The employee fairs well too. If they earn $1,000 per week and we assume their federal and FICA withholdings are 25%, then their net check is $750. If we deduct $100 insurance premiums from this they wind up with $650 in their pocket. However, if this is done pre-tax, they wind up with an additional $25 per week or $1,300 per year.
So considering this option for your employees is a smart move and one that is sure to make both parties happy. Just ask us and we’ll gladly provide you with the contact information of our knowledgeable AFLAC representative.