Employee Benefits for Small Business Owners
Understanding Employee Benefits
Employee benefits encompass various forms of non-wage compensation provided to employees in addition to their regular salaries or wages. These benefits can include health insurance, retirement plans, paid time off, and other perks that contribute to an employee’s overall compensation package. For small business owners, offering a well-rounded benefits package is essential to remain competitive in the job market and to foster a positive work environment.
Why Traditional Raises Cost More Than You Think
Here’s the hard truth: when you give a raise, both you and your employee pay more in taxes. You, the employer, are hit with higher payroll taxes like Social Security and Medicare. Your employee sees a chunk of that raise vanish into federal and state withholding.
Example:
Give your employee a $3,000 raise? They might only take home $2,200 after taxes. And your business is now paying more per paycheck, plus more per employee in tax liability.
That’s where a Section 125 Plan flips the script.
What is Tax-Smart Pay?
Tax-Smart Pay is a way to increase your employees’ actual take-home income without raising their gross salary. Through a compliant Section 125 Cafeteria Plan, employees use pre-tax dollars to pay for benefits like health insurance premiums, medical expenses, dependent care, and more.
That means:
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You reduce your total payroll tax burden
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Employees get more spendable income
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Everyone wins—and no raise needed
For every dollar that employees use pre-tax, you save 7.65% in employer-side payroll tax (FICA). Multiply that by multiple employees, and the savings add up fast.
What It Looks Like in Real Life
Let’s say Sarah, one of your employees, has $4,000 in annual insurance premiums. With a Section 125 Plan, she pays that amount with pre-tax dollars. That reduces her taxable income by $4,000.
She takes home more each paycheck. You save hundreds in payroll tax. Multiply that by your team and you’ve just unlocked thousands in annual savings—for both of you.
And the best part? There’s no salary increase needed.
How Section 125 Solutions LLC Makes It Easy
Our mission is to make this powerful tax strategy simple and stress-free. We’re not here to sell you a one-size-fits-all plan. We connect you to vetted third-party administrators who will help design, document, and set up a compliant Section 125 Plan tailored to your business.
No guesswork. No legal confusion. Just proven, IRS-compliant savings.
We act as your benefits broker—not an administrator—so we stay focused on helping you understand your options, connect to the right providers, and make informed decisions. Think of us as your guide to smarter pay and happier teams.
Disclaimer: Section 125 Solutions LLC does not provide legal or tax advice. We act as a referral partner to third-party administrators who are fully qualified to implement and manage compliant Section 125 Cafeteria plans.
Try Our Section 125 Savings Calculator
Find out how much your business could be saving—instantly. Whether you’ve got five employees or fifty, the tax benefits of a compliant Section 125 Plan can add up fast. Use our simple calculator to estimate your potential savings in just a few clicks.
- See how much you could reduce payroll taxes
- Discover how much more your employees could take home
- Get a custom plan quote with zero pressure
Start saving smarter—run your numbers now.
→ Disclaimer: Calculations provided are for informational purposes only and do not guarantee specific savings. Actual results may vary depending on your payroll setup and employee participation.
Book Your Consultation
Explore how Section 125 plans could save your business over $1,000 per W-2 employee each year. Book a free consultation to see how much you could be losing by not having one.
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