P R O F E S S I O N A L . . . C O N T R O L L
E R S
Fringe
Benefits are Bargains © 2003
by Adrian W.
Hollander, C.P.A., CISA, CIA, CBA,
CFSA,
President of COMPLUS Inc. – Professional Controllers
Have you ever heard that
business owners hire part-time workers so they don’t have to pay fringe
benefits? Hiring part-time workers may
be a good idea, but to avoid paying for fringe benefits is the wrong
reason. Challenge anyone who makes this
assertion. If the amount of work really doesn’t
justify paying for a full-time worker, there are two good alternatives: hire a
part-time worker or engage a contract service.
As long as the amount paid for the work being done is less than what a
full-time worker would cost, either alternative may be superior.
Hiring a part-timer to avoid
paying for fringe benefits is a fallacy, besides it’s also not economically
sensible. Whatever amount that is paid to
a worker for work done goes to support the lifestyle of that worker. A part-time worker may need more than one job
to support his/her standard of living.
Certainly that should be obvious if the amount paid to the worker is small
relative to his/her lifestyle, regardless of the hourly rate.
Payments for fringe benefits
are generally worth more than $1.50 in retail value for every $1 spent by the
business. This is a bargain that really
isn’t too good to be true. Traditional “benefits”
are retirement savings, health and life insurance and other medical or
child-care expense payment programs.
With a “Section 125” cafeteria plan, money can be allocated by an
employer to be spent for a wide variety of purposes, individually chosen by each
employee. For an employer to give an
employee $1 of spending power, the employer must deposit more than 30 cents in
taxes (federal income tax withholding – usually at least 15%, FICA and medicare – 15.3%, Federal and State Unemployment taxes –
more) and pay for workers comp insurance, generally based on gross wages,
excluding payments for “benefits.” In
addition, by buying “benefits” in bulk, the employer usually pays a “wholesale”
(lower) price, less than what the worker would pay for buying the same item as
an individual consumer (if the item were even available).
If the object is to get the
most value for money spent, fringe benefits are bargains.
send e-mail to: AHollan700@aol.com