Tips to retain and reward your team members
Your business is made up of the work and dedication of your team members. Each of them has grown in their roles and responsibilities - and now you are wondering how you can retain them and keep them engaged and giving their best! In this blog we share with you five ways to reward and retain them. And we discuss the tax implications of each recommendation.
1. Bonus- Offering a bonus is an expense for your business, therefore reducing your business net income. On the employee's side this is a taxable benefit, much like a salary pay taxes, CPP and EI will be deducted. Make it more relevant by tying their bonus to the business' profitability margins. You do not need to share numbers with you team if you choose not to. But you can definitely speak to the correlation of business margins to their bonus. In our opinion this rewarding methodology requires time and analysis and it can equally be quite successful at showing that their contribution matters and is appreciated.
2.Benefits such as health benefits, RRSP matchup contributions - Offering additional benefits is also an expense for your business. and will reduce your business net income. Health benefits and RRSP match up contributions are non-taxable benefits to your employees. This option is great but only works if this matters to your employees. If they do not see the value in it - it's best not to implement it.
3. Cash or near-cash gifts - Gifts are considered expenses for your business and are only taxable to your employees if they surpass the $500 mark.
If the gift is a prepaid card, or a gift card that cannot be converted into cash this the gift is considered near-cash for tax purposes. If the cash or near-cash gift is $1,000 only $500 is considered taxable and must be reported in the employee's T4.
4. Paid for training, seminars and product knowledge sessions: Any external training and learning opportunities for your team are expenses to your business. This option is nontaxable for your employees and shows your business cares about their continuous development.
5. Praise: This is a time-sensitive off-the-books approach that shows instant appreciation. Some of us like to hear that we are doing a good job when we are and not later, when the performance review is due (hope your business has an annual performance review, right?).
6. Hold team-building activities: Activities as a group for recreation are 50 percent tax deductible for your business and well worth the investment. Whatever this activity ensure you take the business out of your team's time and is appropriate for their skills and personality.
🍃 Don't leave it to year-end. Planning and budgeting for most of these options are key to developing a strong team and showing that they matter to your growing business.
For more tips follow us @blossomcpa or contact us