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What is a Section 125 Cafeteria Plan?

Monday, April 19th, 2010

One of the most under used employee benefits for any business today is the Cafeteria Plan. A Cafeteria Plan, or a Flexible Benefits Plan. It is basically an Employee Benefits plan, assigned to aid the employee avail of Section 125 – the Internal Revenue Code – and was legally implemented under the IRS Code – Section 125 in 1978. This plan would ideally allow an employee to elect certain tax benefits – on a pre tax base in the form or Qualified Expenses (for example – a health insurance premium). Thus, in turn, reducing the total tax paid and, in turn, allowing them to have more in-hand income.

The advantages are:

1. Employees can save on much needed income tax – thus taking home a larger pay

2. Employees can now save on the payroll taxes

3. The morale of the employee gets boosted

4. There is no net cost incurred to implement this sort of a plan

5. Funds put into these accounts are not subject to Federal Taxes – State Taxes or Social Security Taxes.

6. On an average, for every dollar they contribute to the FSA people save any where from $.25 to $0.49!

In this plan, if you are an employee and you have not been reimbursed for your medical expenses, you can manage them through a Medical Flexible Spending Accounts (FSA). A Medical FSA allows you to fund some medical expenses on a pre tax basis. This also allows you to pay for dependant care.

Cafeteria plans provide the necessary funds for the employer to purchase fringe benefits. There are three ways an employer can fund a fringe benefits plan, namely:

a.) Employer Direct Contributions

b.) Employee Pre Tax Contributions

c.) Employee Post Tax Contributions

In a nutshell, Cafeteria Plans, are not only beneficial to an Employee, but have a vast scope to directly, and indirectly aid the employer as well! To know about the other employee benefits we could help you with, please view our complete services list.

The Urging and Surging Need for Group Benefits

Thursday, April 8th, 2010

There are many thing people look for in a job. A great pay package, a feasible location, and so on. Today, some people even ask for group benefits or employee benefits. These are the additional bonuses offered by the company, in addition to the existent salary package.

Some companies today feel that investing in Group Benefits for their employees is crucial. What is so important about Group Benefits? Why are companies world over shifting to models with a focus on employee benefits? Well, the answer is simple. Would you rather work for a company who pays you, and gives you additional perks, or for a company who just pays you!

Both employee as well as employer benefit from these perks. One could say, by providing incentive to the staff, the employer can see better output and performance. On the other hand the employee is availing of facilities like health insurance, dental, etc. which would be likely to boost his morale to work.

You might be contemplating the reasoning behind this – it is very simple. The pay package or the wages you pay your employees are their dues for the effort and work put in by them, over a certain period of time (a day’s wages, a week’s salary, a month’s pay, etc). The gratuity on the other hand is to thank the employee for being a part of that particular institution.

Also, by offering benefits you bring about an atmosphere of “you get what you put in”. This is a way of being grateful for using their talent to the optimum. For every additional qualification and experience the employee has – the employer is likely to add to the benefits, thus ensuring the best possible outcome.

Since, these benefits are employer defined; the employer is more likely to find the perfect fit for the employee he is looking for by offering more lucrative packages, thus taking the first step forward, in a great employee – employer relationship!

Last, but not the least, these benefits create a sense of safety for the workers. If, you know that the company you are working for is for example, covering your Mediclaim to a certain amount, you have on less responsibility to shoulder.

The Four Point Business Insurance Model

Thursday, April 8th, 2010

Business insurance can cover you and your company, regardless of how large or small your company is. There are several parts that fall under the term Business Insurance, four of which are vital and any company would be advised to have them.

The first and most important would probably be health insurance, which is given to provide benefits for the employees as well as the employers. Additionally, some employers offer life, disability insurance etc.

The second of this could be marked as Property Insurance. Property insurance is considered, keeping in mind the likelihood of any damage to the actual physical structure or building where the office premises are located.

Casualty Insurance is the third key part for Business Insurance Planning. Sometimes people pair this with Property Insurance as it protects the company from any sort of loss that can tarnish the company’s image.

The last important part of business insurance is liability insurance; this can protect your business for any lawsuits that claim negligence. This negligence may be brought on by the employees, or by the business as a whole.

There are other smaller forms of insurance that can be part of business insurance like vehicle insurance that protects any damage to the company vehicles. In addition, the workers insurance needs to be brought into this list – this would be for any injury sustained while they are working with relation to their work.

Thus, it is crucial for any company, regardless of startup or existent, regardless of how many employees form the frame work of the company, and lastly regardless of what the financial situation of the owner.