Showdown 3: Benefits

This is part three of a series exploring factors in self-employment and traditional employment. For more about this series, read the opening article.

Benefits

What kind of non-financial compensation you receive

Self		Boss
Pros	Cons	Pros	Cons
You can set up excellent benefits such as matching retirement plans or fully-funded health coverage Tons of vacation time if you’re willing to take it Health insurance coverage is tax deductible	Benefit plans are extremely expensive because you don’t have a large group discount You may find it difficult or impossible to take vacation time at all Providing benefits to employees is very expensive	Large group discounts make benefits cheaper to provide and buy into You may have the option to get a company car, travel and training stipends, etc.	Sometimes benefits are taxable – which is a hidden cost You rarely have influence over the benefits packages or plans

Conclusions

As we’ve discussed before, startup mode usually means low budget. An excellent 401k package may be in your future, but most small businesses simply can’t offer the kind of competitive packages that larger companies can. It isn’t impossible, but it’s something where financially stable companies have an advantage. More recently, co-op plans and HSAs have opened the door for small companies to provide some of these benefits.

Winner: Traditional Employment

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