Health insurance can be a very complicated part of being a small business owner. Many small business owners struggle with what they should do when it comes to health insurance for their employees. Many times they want to offer health insurance as an option but they find it difficult to fund that as a business owner. It can be very expensive and prices are only rising due to the healthcare mandate. However, there are options for you as a business owner so you can save money as well as provide a health insurance plan that they can choose.
As a business owner, if you offer a qualifying group health insurance plan for your employees, you may be able to deduct 100% of the the premiums that the business pays for the employees. This is great news for all businesses but especially small business owners. While the cost may be high for insurance, if you can afford to pay it up front, you can deduct the amounts from your taxes at the end of the year. Another option is offering the plan as a total compensation package which would allow you to cut your payroll taxes.
Health Care Tax Credit
Along with the new healthcare mandate, there is also a new tax advantage for small businesses. This is designed to help you pay for health insurance for your employees, or at least contribute to the premiums. The tax credit can be up to 50% of the amount that you pay for the health insurance premiums as the business. It is also designed to help low or moderate income employees. To qualify for this tax credit, you must meet some basic qualifications. First, you must have less than 25 full time employees on staff. You must pay below the average of $50,000 annually per employee. Lastly, you must contribute at least 50% or more to the employee only portion of the health insurance premium. with this tax credit, the smaller the business, the bigger the credit can be. You are eligible to get this credit up to two consecutive years as well so it is great to take advantage of it.
Contact us for more information about the tax benefits of offering health insurance. We can also help you find the perfect plan for your business and your employees.