Essential Employee Benefits for Small Business

benefits and employee scale graphic

Employee benefits make any business successful. The more cared for employees feel, the better their performance will be. Company culture and morale will be positively off the charts. When starting a small business, choosing which employee benefits are necessary and when to begin providing them may be challenging. Canal HR will help you figure out what’s best for your company. Read below to discover what the essential employee benefits for small business are. 


As a small business, 401Ks are an excellent investment for your employees and you. You’re helping employees invest in their futures while investing your support for their long-term service with your company. But choosing a 401K doesn’t just mean opting in to invest, as multiple types of 401Ks are available. 

The first type of 401K is the traditional plan, which is technically a “qualified” retirement plan and is thus eligible for special tax benefits, according to the IRS. “Qualified” retirement plans are established by an employer to benefit the employee and their beneficiaries. However, “qualified” retirement plans offer more choices for you to make. For example, defined contribution plans evaluate the 401K balance through contributions and their performances. This means that employees must invest and contribute for the account to gain value. The other option is pension plans, where the employer makes regularly planned contributions to a specific amount of money already set aside to fund later retirement payment requirements.  

The next type of 401K plan is Roth 401K’s, which are not typically offered but are becoming increasingly popular due to their easy accessibility after taxes. Roth 401K’s allow employees to contribute after taxes are taken out, easing the financial burden of retirement and allowing for peace of mind. 

Finally, employers can directly match employees’ 401K contributions through contribution matching. This type of 401K typically uses the annual amount an employee invests in matching.  

Medical Insurance

Medical insurance is another essential employee benefits for small business. Employees want to feel cared for in the present and in the far or near future. For small businesses, you can choose from specific small business group health insurances. These small business group health insurances will cover a portion of the premium provided by the employer. They’re probably familiar, as everyone uses the same types of general insurance–just on a different scale for small businesses. 

The first available small business health insurance is HMO–Health Maintenance Organization. These provide employees with multiple insurance providers. These providers then give their members a set amount of coverage for either a monthly or annual fee. The second type is PPO–Preferred Provider Organization. PPOs have individual contracts as opposed to multiple providers, like HMOs. These individual providers can then create a comprehensive and flexible coverage net for their members. Finally, there is the traditional form of medical insurance, where members pay for services and then submit the bill to their insurer later. 

Life Insurance

While not typically the go-to option for businesses, life insurance is a great way to support your employees peace of mind. Depending on their situation, they may worry about the care their family will receive once they’re gone. Providing life insurance policies will show your employees that you care for them and their families/beneficiaries. 

Life insurance involves the policyholder paying a premium rate, and in exchange, the insurance company will provide a lump sum to their beneficiaries–called a “death benefit”–when they pass. Policyholders and employees can choose to get life insurance for a set term–say, five to ten years–instead of the remainder of their lives. This can come in handy if you have a dangerous job, for example. Be sure to look at the individual policy, though, as some life insurance policies preclude certain deaths from their policy. 

Dental Insurance

Although small businesses are not required to provide dental insurance, everyone needs it whether they like it or not–making it one of the essential employee benefits for small business. Even regular teeth cleanings can become expensive, so providing this service for your employees is especially helpful. 

Disability Insurance

Another essential type of insurance is disability insurance. It’s an important addition for employee benefits for small business because of its wide-scale applicability. Like 401Ks and medical insurance, disability has a few options. Disability insurance generally covers partial or total amounts of income in case of disability or illness. However, the two options within that include short or long-term insurance. 

Short-term disability is just that–for the short term. It covers a partial amount of the employee’s income for a temporary period. Some short-term disability policies include pregnancy too, which is an excellent addition if you’re uncertain about how to incorporate parental leave into your company. Long-term disability covers more extended periods of need, such as injuries or disabilities that force employees to take longer leaves of absence. Moreover, you can also find policies that cover employees until the age of 65 or cover a specific set of time. 

Cancer Insurance

As there has yet to be found a cure for cancer, providing cancer insurance and general medical insurance is a great way to go the extra mile for your employees–and their families. Cancer insurance is a form of supplemental insurance that can be added to prior medical insurance, as traditional medical insurance may not cover cancer treatments. Supplemental insurance typically covers deductibles, co-pays, and co-insurance, with occasional additional policies like coverage for lost income. If you choose to provide cancer insurance as an employer, make sure it abides by and cooperates with the medical insurance plan of your choice. Sometimes, plans may counteract, costing policyholders even more money. 

Offer Essential Employee Benefits Through Canal HR 

Employee benefits are essential. Canal HR’s services can help you determine which benefits are right for you and your team. Our team works to allow you and your team to focus on growing the business itself while we focus on the day-to-day HR processes. Visit our website or contact us if you have more questions.