If you can give your employees a benefit that doesn’t cost you anything, wouldn’t you do it?
Owners should check on discounts and rewards that can be offered to employees without any cost to the company.
Let me give you some examples.
Discounts on company products and services
The price reduction you give to your employees on the goods and services offered to customers and clients can be a valuable fringe benefit. Employees aren’t taxed for:
- For a discount on services up to 20% of the price you charge nonemployee customers for the service.
- For a discount on merchandise or other property if it’s limited to your gross profit percentage times the price you charge nonemployee customers for the property.
The discounts must be offered to an employee on a nondiscriminatory basis. (Partners who perform services for their partnership are treated as employees for this purpose.) If the benefits are restricted to certain employees, then you (the owner) and highly compensated employees are taxed on this benefit.
Discounts and rewards through company memberships
Check the organizations to which you belong to see whether there are any benefits that can be shared with employees. For example, if you belong to NFIB, you can give employees discounts to their purchases of TurboTax, Sprint services, Fiat Chrysler Automobiles, and stays at Wynham hotels; your membership entitles them to it.
Check for offerings through your Chamber of Commerce, trade associations, and other membership organizations.
Credit card rewards and loyalty programs
Using company credit cards doesn’t preclude employees from enjoying rewards. For example, if you give a company American Express card to an employee, he or she can enroll in the Membership Rewards program and use the points personally. Of course, the company should be sure that use of the card is limited for business reasons (and not to accumulate more rewards points).
Whether or not an employee enrolls in a rewards program related to a company credit card, it’s common business practice to allow employees to the frequent flyer miles they’ve earned on business trips (paid for by the company) for personal travel.
Companies that have employees frequent the same hotel chain for business travel may earn rewards that can be shared with employees.
The best rewards you can give your employees, according to Mary Kay Ash, are recognition and praise. But they won’t be unhappy receiving tangible rewards as well.