Most business startups are focused on selling their products or services. That’s understandable. If you’re not selling, you’re not generating revenue, and without reliable cash flow, your company struggles to survive. But not too long after launching a business, you’re looking at hiring your first employees. You want to make sure you get the right employees from the beginning. Employee turnover is a costly proposition, especially for a fledgling business. It is estimated that it costs 2.5 times a person’s salary to replace a lost employee. That’s as much as $75,000 for an employee making $30,000 per year.
According to Willis Towers Watson, 51% of employees joined their current company because it offered a retirement plan. Offering a 401k retirement plan shows candidates you care about their financial well-being. Meaningful benefits such as a small business 401k plan lend credibility to your company, which is crucial for a startup.
Many business owners think they can’t afford a 401k retirement plan but companies that offer this benefit report increased employee retention and happier, more efficient workers. With a tight labor market, offering a 401(k) plan for small business is essential to retaining employees.
Saving on Taxes
In 2001, a tax credit was created to encourage more business to launch retirement plans. The tax credit is for costs associated with starting a retirement plan, including a 401(k). The credit equals 50% of the first $1,000 of qualified startup costs, including expenses to set up and administer the plan. That does not include the long-term savings that come from investing pre-tax dollars in a retirement plan for you and your employees.
Setting up and administering a 401k is as simple as Requesting a Proposal. We can help position your business to attract and retain employees through a small business 401k retirement plan.