While the idea of being financially generous with your employees may appeal to you, the payroll taxes that come with increased salaries can be a lot to take on for many businesses. There are ways to increase what you give to your employees without getting the tax man on your back. Here are some steps for reducing payroll taxes.
Consider Fringe Benefits
Instead of offering higher salaries to your employees, why not consider increasing the perks that you offer? Many companies have been successful in offering employees fringe benefits such as free or reduced price metro tickets, employee meals while they're at the office, comprehensive medical and dental insurance, and other perks that many employees would use across the board. You could even allow your employees to choose which perks they would like to receive, making it a more interactive choice and reducing your expenses for things that your employees won't actually use. And in the end, you can make your company look more generous while avoiding the increased payroll taxes that would come with offering your employees a raise.
Push the Retirement Plan
Another area where you can save while giving more is with a great retirement plan. These amounts can be tax-free income added to your employees' savings account. One good policy is to match what employees contribute to their own accounts, up to a certain dollar amount. You can encourage your employees to think more about saving for their future, put a little extra money in their accounts, and avoid having the taxman take an immediate cut, all at the same time.
Some employees may also benefit from a low-interest loan program offered by your company. You might have loans available in hard times for employees, and the repayments could come directly out of their salaries. The program may be at little extra cost to you in terms of money and taxes, but of great help to your most loyal employees.
Make Sure Reimbursements Aren't Counted as Income
Finally, you may wish to reimburse employees for business lunches, entertainment, and other expenses. While this can be a nice perk, make sure that money isn't being counted as income for increased payroll tax savings.
In short, there are a few ways that you can give more back to your employees while not having to greatly increase your payroll taxes. It helps to speak with an expense reduction consultant to determine what strategies might work for you, and the impact that they would have on your tax bill.Share