Small businesses are the backbone of the economy. In fact, the SBA observes 99.9% of American businesses are small. With 33,185,550 small businesses in the United States employing 61.7 million Americans, they generate 32.6% percent of known export value.
It’s no surprise that employees who power these enterprises are invaluable assets. Offering attractive employee perks for small business is crucial for small businesses to recruit and retain top talent. However, with limited budgets, it can be challenging to compete with the comprehensive packages larger corporations can offer. But fear not, there are creative and cost-effective ways to enhance your small business employee benefits package.
In this article, we’ll explore the world of staff incentives, discuss the concept of phantom stock, and provide actionable strategies for small business owners to amplify the benefits they offer to their employees.
What Counts as “Employee Benefits" for a Small Business?
Staff incentives are more than just a paycheck. They encompass a range of offerings designed to motivate and reward employees for their hard work and dedication. Incentives can take many forms, from monetary bonuses to flexible work arrangements, and they play a pivotal role in fostering a positive work environment and company culture.
Fundamental Employee Benefits for Small Businesses
Health Coverage Options
Health insurance is the benefit most employees look for first. For small businesses, there are a few ways to offer it without breaking the bank.
Group Health Insurance This is the classic option. You buy a plan for your team, and everyone gets coverage. It works best if you have five or more employees. Owners should know: group plans can be pricey, but they’re a big draw for hiring and keeping people.
QSEHRA and ICHRA If you have a tiny team (under 50), look at QSEHRA (Qualified Small Employer HRA) or ICHRA (Individual Coverage HRA). These let you reimburse employees for health insurance they buy themselves. You set the budget, and it’s tax-free for both sides. This is a flexible, affordable way to help with health costs if you can’t swing a group plan.
HSA/FSA Add-ons Pairing a high-deductible health plan with a Health Savings Account (HSA) or a Flexible Spending Account (FSA) lets employees save for medical expenses tax-free. HSAs are owned by the employee and roll over year to year. FSAs are “use it or lose it” each year, but can be offered even if you don’t have a high-deductible plan.
Owner Considerations Pick what fits your team size and budget. Group plans are simple for employees but cost more. HRAs and HSAs give you more control over spending and can be a better fit for micro teams.
Retirement Benefits
Offering a retirement plan helps your team plan for the future—and it’s a great way to stand out as a small business.
401(k) and Safe Harbor 401(k) These are the gold standard. They work for businesses of almost any size, but there are more rules and costs. Safe Harbor 401(k)s are easier to manage and avoid some testing headaches if you offer a company match.
SIMPLE IRA Best for businesses with under 100 employees. It’s easier and cheaper to run than a 401(k), but you have to offer a match or a small contribution for everyone.
SEP IRA Great for owners and very small teams. Only the employer contributes, and you can skip years if cash is tight.
Match Ideas Even a small match—like 2% or 3%—makes a big difference to employees. It shows you care about their future.
Paid Time Off
Time off matters, but it’s tricky when you run a small team—especially if you have field crews.
PTO Bank vs. Sick/Holiday Splits A PTO bank lumps all time off (vacation, sick, personal) together. It’s simple and gives employees flexibility. Splitting time into sick days, vacation, and holidays gives you more control but is harder to track.
Field-Team Scheduling Tips Stagger time off so you’re never short-handed. Use a shared calendar or scheduling app. Set clear rules for how much notice you need for time off, especially during busy seasons.
Insurance Basics
Beyond health, a few other types of insurance can make your benefits package stand out.
Disability Insurance Short-term and long-term disability help cover pay if someone gets hurt or sick and can’t work. It’s not expensive and gives peace of mind.
Life Insurance A basic life policy is a low-cost way to show you care about your team’s families.
Dental and Vision You can add these to your group health plan or offer a stipend so employees can buy their own.
How to Bundle or Stipend Bundling insurance (health, dental, vision, life) with one provider can save money. If that’s too much, offer a monthly stipend for employees to buy what they need most.
Phantom Stock for Small Business
Phantom stock is a simple way to keep your best people and get everyone rowing in the same direction—without the headaches of giving away real equity or messing with your cap table.
What is Phantom Stock?
Phantom stock is a cash bonus that moves with your company’s value. It’s not real stock, so there’s no dilution or ownership changes. When your company grows, so does the value of the phantom stock. When it pays out, it’s just cash—easy for payroll and taxes.
If you’re an LLC, you use phantom units. If you’re a corporation, you use phantom shares. Either way, it works the same.
How It Works
You grant phantom stock to key employees. It vests over time or when they hit certain goals. When a trigger happens—like selling the company, hitting a milestone, or staying for a set number of years—they get a cash payout. You can pay it all at once or in installments.
Taxes
For employees, payouts are taxed as regular income and show up on their W-2, just like a bonus. For the company, payouts are tax-deductible. This makes administration much easier.
Why Small Businesses Love this Employee Benefit
Phantom stock is fast to set up when you use a platform like Reins. There’s no trustee, no ERISA, and no complicated paperwork. It’s easy to explain to techs, crew leads, and anyone who doesn’t want to mess with stock options or legal jargon. It creates employees who think and act like owners without giving up real ownership of the company.
It works: 94% of employees who get Reins’ phantom stock stay with their company.
Want to see how it works? Book a free consultation call to see if phantom stock makes sense for your company.
High-ROI, Low-Cost Employee Benefits
You don’t have to spend a fortune to offer benefits your team will actually care about. Here are some affordable perks that make a big impact:
Flexible Schedules & Shifts: Letting employees swap shifts or adjust their hours is huge—especially in the trades. It helps with work-life balance and keeps people happy.
On-Call Differentials: Pay a little extra when someone’s on call. Even $1–$2 more per hour shows you value their time.
Uniforms & Tools/Boots Stipend: Cover the cost of uniforms, boots, or tools. A $100–$150 stipend each year goes a long way and keeps your crew looking sharp and safe.
Training & Licensing: Pay for certifications, licenses, or extra training. It helps your team grow and makes your business stronger.
Wellness Stipend: Offer $25–$50 a month for gym memberships, fitness apps, or even a new pair of work boots. It’s a small cost that shows you care about their health.
Commuter or Mileage Reimbursement: Help with gas, parking, or transit passes. Even $30–$50 a month can make a difference, especially for techs who drive a lot.
Phone/Data Allowance: If your team uses their own phones for work, cover part of their bill. $20–$40 a month is fair and easy.
Referral Bonuses & Spot Awards: Give a bonus when someone refers a new hire or goes above and beyond. Even $100–$250 for a referral or $25–$50 for a spot award keeps people motivated.
Quick Benefit Math: Most of these perks cost less than $50–$150 per employee each month. They’re easy to roll out and make your business a place people want to stay.
Affordable employee benefits packages for small businesses like these help you stand out, keep your team happy, and boost retention—without breaking the bank.
Profit Sharing & Bonuses
Profit sharing and bonuses are powerful ways to reward your team for helping the business win. You don’t need a complicated system—simple, clear formulas work best.
Annual or Quarterly Profit Sharing Set aside a percentage of your company’s profits—say, 5% to 10%—and split it among your team. You can divide it evenly, or base it on each person’s role, hours worked, or time with the company. Payouts can happen once a year or every quarter. The key is to keep the math simple and share the numbers so everyone knows how it works.
Simple Formula Example:
- Pick a profit pool (ex: 10% of net profit)
- Decide how to split it (evenly, or by hours/role)
- Pay out at the end of the year or quarter
Bonuses with MBOs or Scorecards: For field teams, tie bonuses to clear goals—like job completion rates, safety, or customer reviews. Use a scorecard or Management by Objectives (MBO) system to track progress. When your team hits the targets, they get a bonus. This keeps everyone focused on what matters most and makes the bonus feel fair.
When to Use MBO/Scorecards: Use these when you want to reward specific behaviors or results—like fewer call-backs, faster job times, or top-notch service. They work best for field crews and techs who can directly impact the numbers.
Profit sharing and simple bonuses help everyone feel invested in the company’s success—and make it easy for you to reward great work.
Balancing Costs with Impact
One of the biggest challenges for small businesses is managing the cost of employee benefits. The key is to balance the financial impact with the potential return on investment in terms of employee satisfaction and retention.
While not a small business, Google’s long-term standing as an industry leader continually earning coveted “Best Places to Work” titles flipped employee attraction and retention on its head with over the top employee benefits. Since the early 2000’s, the spoils showered on employees at Google slowly proliferated to other industries and smaller businesses to compete for top-notch talent, raising the bar for expectations.
In a journal article titled, “Google Benefits or Google’s Benefit?,” author Susan J. Stabile notes, “While some of Google’s standard benefits are generous, the company really stands out in the benefits it terms “Beyond the Basics” and “Way Beyond the Basics.””
Large and small companies alike need to take a close look at the costs of offering such benefits over the ROI.
Assessing Employee Needs
Before revamping your benefits package, assess the needs, preferences, and desired coverage options of your employees. Surveys and one-on-one discussions can provide valuable insights into which benefits are most important to them. It’s not a bad idea to have company-wide meetings to gauge interests in potential benefit offerings.
Prioritizing Benefits
Not all benefits are created equal. Easier said than done, prioritize the benefits that will have the greatest impact on employee satisfaction and retention, and that align with your budget.
Monitoring and Adjusting
Regularly review your benefits package to ensure it remains competitive and meets the evolving needs of your employees. Be prepared to make adjustments as necessary, and communicate any changes clearly to your team.
Build Your Small-Business Benefits Package in 7 Steps
- Define Your Goals: Figure out which roles are hardest to keep or fill. Know your churn rate and what it costs when someone leaves. This helps you focus your benefits where they matter most.
- Pick the Essentials: Start with the basics: health coverage, retirement plan, and paid time off. These are the benefits and coverage options most employees expect.
- Layer in High-ROI Perks: Add two or three affordable, high-impact perks—like flexible schedules, tool stipends, or wellness allowances. Pick what fits your team best.
- Add Ownership-Style Incentives: Consider phantom stock or profit sharing. These give your team a stake in the company’s success without the hassle of real equity.
- Set Your Budget: Figure out the total cost per employee. Plan for cash compensation—like bonuses or profit share—so you’re never caught off guard. Installments can help smooth out big payments.
- Draft Policies & Agreements: Put everything in writing. Use clear, simple policies and agreements. Reins templates make this step easy.
- Pilot, Announce, Measure, Iterate: Test your benefits with a small group first. Announce the package to your whole team. Track what works and what doesn’t, then tweak as you go.
Follow these steps to build a benefits package that attracts and keeps great people—without wasting money on perks no one uses.
Communicating Employee Benefits to Field Teams (So They Actually Value Them)
Getting your team to value their benefits starts with how you talk about them. Skip the HR jargon and keep it real.
Toolbox Talks & One-Page Summaries: Go over benefits during toolbox talks—short, regular meetings your crew already knows. Hand out one-page summaries that break down each benefit in plain language. Make sure everyone gets a copy.
Spanish Versions: If you have Spanish-speaking team members, provide all summaries and key info in Spanish. This shows respect and makes sure no one misses out.
Paycheck Callouts: Highlight benefits on pay stubs or with a quick note each payday. Remind your team what you’re investing in them—like “$100 added to your 401(k) this check” or “Boot stipend paid this month.”
Simple ROI Story: Connect the dots between company performance and their rewards. Say, “If we hit X margin, your award grows by $Y.” Make it clear how their hard work pays off for everyone.
Keep it simple, repeat the message, and use real numbers. That’s how you get field teams to see the value in their benefits.
Measuring the ROI of Employee Benefits for Small Businesses
To know if your benefits are working, track a few key numbers:
- Turnover %: How many people leave each year? Lower is better.
- Time-to-Fill: How long does it take to hire for open roles? Good benefits can speed this up.
- Offer Acceptance Rate: Are candidates saying yes to your job offers?
- Absenteeism: Are people calling out less?
- Safety: Fewer accidents mean your team is engaged and cared for.
- Revenue per Tech: Are your employees more productive?
One stat stands out: 94% of employees who get phantom stock stay with their employer. That’s real retention you can measure.
Track these KPIs before and after rolling out new benefits. You’ll see what’s working—and where to tweak your package for even better results.
Conclusion
Small businesses have unique opportunities to create compelling employee benefits packages that resonate with their workforce. By offering a mix of traditional benefits, innovative incentives like phantom stock, and a focus on individual needs, you can cultivate a loyal and engaged team.
Remember that the best benefits package is one that evolves with your business and your employees. Stay attuned to their needs, and don’t be afraid to think outside the box. With the right approach, your small business can offer big benefits that make a real difference in the lives of your employees.
