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The present trends show entrepreneurs choosing to start their own business. This may range from starting a company from scratch or acquiring an existing one. The focus of this article is on small business.

I am addressing the issue of hiring employees. Benefit plan costs are often forgotten when considering starting a business. Every entrepreneur must consider if he or she intends to offer benefit plans.The following questions will be addressed:

- Who is going to pay for the benefits?

- How comprehensive should the list of benefits be?

- How flexible should the benefit package be?

- Are the benefit plans similar to those of competitors?

In past years, employers paid a majority of the costs associated with benefit plans. However, in today's society, the trend is no longer so. One of the biggest reasons for the change is because of rising health-care costs. Benefit package costs are labor costs. These tie to wages and salaries. With the employees in today's market, a greater emphasis is being placed on benefits that are being received. No longer are wages the only factor. Employees are weighing the importance of health-care plans, pensions and vacations.

It is important for you as employers to decide how much you will pay and how much the employee will supplement. There are three areas of interest: a) workers' compensation, b) unemployment compensation and c) Social Security benefits.

Workers' compensation protects the employee from injuries sustained on the job. Premiums are paid by the employer into a state-oriented or private fund. Unemployment compensation pays employ-ees for work time missed due to layoff or termination. Social Security provides employees with benefits when he/she retires. Also, it covers old age, survivors and disability insurance. Social Security is funded jointly by the employee and employer by a tax set on an amount of wages. Therefore, compensation, unemployment and Social Security costs are incurred when hiring employees.

The extent of the benefit plans package can be solely those required by law or a comprehensive list. For example, pension plans can be used that reward employees for longevity with the company. There are other benefits such as 401 plans in which the employer deducts from the employee's salary and invests in a limited number of employer-approved funds. In addition, benefit packages can include early retirement, holiday pay, vacations, leaves of absence, medical insurance, fitness programs and club memberships.

It is believed that benefits packages are necessary to attract and keep employees. Therefore, employers must have a specific definition of the extent of benefits that will be offered.

Many of the traditional packages that were once used are now obsolete. It is important for you as employers to be able to respond to the changing environment. For example, there are many households in which both husband and wife work. By being flexible, it may be advantageous to encourage one spouse to pick up the dental insurance and the other to handle the medical.

Employers need to know if they will use a standard approach for everyone in offering benefits to employees. The other possibility is a "cafeteria approach" in which the employees are able to pick and choose among different benefits. The trend toward cafeteria plans continues to grow, allowing the employer to meet the demands of the varied work force.

One of the key strategies to any business is that of a competitive offering. Employers want to be able to compete in the labor market for qualified employees. At the same time, employers do not want to have the cost of the plan so high that the plan is not feasible in the industry.

Employers have identified several factors for offering employee benefits: 1) attract good employees, 2) reduce turnover, 3) motivate employees, 4) tax-free bene-fits, 5) keep out the union and 6) meet union requirements.

Employers must know what is being offered by competitive employers in the labor market to offer similar packages to recruit employees. Also, these benefits must be communicated to employees and applicants.

With the increase in the number of individuals wishing to start their own business, I believe that many times the cost of benefits plans are omitted. It is very important for the entrepreneur to consider these costs in determining the feasibility of beginning the new company.