Employee Retention: How to Create True Perks for Staff

Fringe benefits are additional perks given to employees over and above regular compensation. Offering fringe benefits to your employees can be advantageous to your childcare business. 

Core Benefits vs. Fringe Benefits

What kind of things come to mind when you hear the phrase “employee benefits”? You might think about employee health insurance and life insurance, a retirement savings plan, or a basic personal time-off (PTO) allowance. Or perhaps things like tuition assistance, childcare reimbursement, meal credits, complementary fitness classes, or even a paid sabbatical present as possibilities.

Depending on the industry and the employer, some of the benefits described above would be considered core benefits, while others can be categorized as fringe benefits. 

Core benefits are employee benefits that are essential to attracting and retaining employees for your childcare business. 

For example, most employees expect to be provided with a basic health insurance plan, as private health insurance can be very expensive. An attractive package of core benefits is needed to encourage employees to join your company and stay. 

Fringe benefits are employee benefits that are non-essential perks that surpass compensation and a standard benefits package. Fringe benefits can vary widely depending upon the nature of the industry and company. 

For example, do you offer any of the following to your employees?

• Childcare discounts, credits, and reimbursement 
• Meal vouchers for the cafeteria or meal service at your daycare
• Paid professional development opportunities
• A generous vacation package
• Flexible work arrangements

These can all be considered fringe benefits. They represent extra incentives that aren’t required but are still desirable aspects of working for your business. 

Taxable vs. Non-Taxable Fringe Benefits 

According to the IRS, fringe benefits are taxable unless they are specifically exempt by law. IRS Publication 15-B, the Employer’s Tax Guide to Fringe Benefits, offers guidance to employers specifying which fringe benefits are considered tax-exempt and how to account for both taxed and tax-exempt benefits when filing employee taxes.

Taxable fringe benefits must be reported at fair market value, and both the employer and the employee are responsible for reporting the fringe benefit at its fair market value. 

The following are considered non-taxable fringe benefits by the IRS:

• Accident and health benefits
• Achievement awards (up to $1,600 for qualified awards) 
• Adoption assistance
• Athletic facilities
• Commuting benefits
• De minimis (minimal) benefits
• Dependent care assistance
• Educational assistance
• Employee discounts
• Employee stock options
• Employer-provided cell phones
• Group-term life insurance coverage
• Health savings accounts (HSA) 
• Lodgings on business premises
• Meals
• No-additional-cost services
• Retirement planning services
• Tuition reduction
• Working conditions benefits

Tax-exempt fringe benefits listed above are subject to rules and regulations from the IRS, so we recommend consulting your tax professional to learn which requirements apply to the fringe benefits you provide at your Early Childhood Education company. 

Advantages of Offering Fringe Benefits

Offering fringe benefits can provide numerous advantages to you as a childcare business owner

• Attract top talent – Fringe benefits create an appealing package to help you attract top early childhood education professionals to your childcare business. 
• Motivate your team – Fringe benefits can be a great motivator for your team members by helping employees feel valued and well taken care of. 
• Encourage employee loyalty – Generous fringe benefits can encourage loyalty from employees and improve employee satisfaction. 
• Promote good physical, mental, and emotional well-being – Fringe benefits fill in the care gaps for your employees by going above and beyond the bare basics of a standard benefits package, and they help demonstrate your care for your team’s physical, mental, and emotional health and well-being. 
• Reduce employee turnover – Fringe benefits encourage current team members to stick around and ultimately lower employee turnover rates. 

As you can see, offering fringe benefits can be significantly advantageous to your Early Childhood Education company. 

The Honest Buck team is here to help you navigate the financial and tax implications of providing fringe benefits to your employees. Contact us today to speak with one of our accounting experts.