Is Daycare a Cost-efficient Fringe Benefit?

Experienced employees are difficult to come by. There is a reason why fringe benefits are often mentioned during the hiring periods of a company. Workplace culture is one of the most important aspects considered by millennials—the determining population of the economy’s future.

Employers began offering fringe benefits as early as during the second world war to compensate for the limits on wages set by the government. The country was rationing raw materials, causing the price of goods to skyrocket. As a result, bosses needed to provide alternatives to cash payments to encourage their employees to stay.

Child care is a clear necessity to most employees, as millions of men and women decide to leave their jobs every year to look after their children. People need someone to take care of their kids so that they can show up for work. Therefore, as an employer, it is an important fringe benefit to consider.

A Tax-free Benefit

Providing your employees with daycare for their children is a tax-deductible expense so long as you qualify. Although the laws pertaining to childcare and taxes are different per state, the Internal Revenue Service (IRS) offers a tax credit of at least 25% of the expenditures an employer might incur during the operation of a facility. Some states even offer a 30% tax credit once all the files are in order.

Your company can benefit from the relevant tax exemptions and credits if at least 30% of those enrolled in daycare are dependents of your employees. It may be a hefty figure in your books at first but securing an employee that can help your business thrive is a valuable return on your investment. Employees will be able to consider how well taken care of they are in your company and will be less likely poached by other employers.

children in daycare

Cheaper for You and Your Employee

Since your employee will prefer to stay with you, you would have saved countless hours and dollars on training them to be efficient at their jobs. You will also spend fewer human resources hours on recruiting new members of your team because there finding replacements will be a less common issue. Furthermore, parents will be able to focus better on work considering how their child is well taken care of. Gone are the days of calling in sick or taking unscheduled leaves because they cannot find someone to look after their kids.

By making sure that parents in your company feel appreciated and understood, they will save time and money, bringing in more time and money into your business. It is a convenient way to operate. Imagine how far investing in children can go. The child will grow up as a member of your corporate family and might even become one of your venture’s assets someday. For example, a comforting minky baby blanket in the daycare center will establish a link between the child and your company. You could be part of their earliest memories. It is not impossible that they could help further the growth of the business as a loyal employee.

Putting Money Where It Matters

Daycare may seem an unnecessary expense for some entrepreneurs but it is a way to show how much you care for your employees. Companies can only develop with the right people on board so you need to show how much you care as early as possible. The little things make a difference in how they will value the business as it grows, and the support provided to parents is a great example of how employers can encourage such an outlook.

Nowadays, the workplace culture may seem a bit overboard with the cereal bars and the ping pong tables but the important fringe benefits are never going to go stale. No matter how mechanized things get, the human aspect of companies is here to stay. Common necessities in working through a career to provide for dependents should be provided for once the business can afford them.

Despite all the grit that millennials boast about, there will always be someone who needs help. A successful entrepreneur can extend services to support their employees, and it is a good thing that the government recognizes the importance of that aid. Daycare is an exemption that fuels an economy for generations, protecting those who build it today and who will build it in the future.

You will be partaking in nation-building while being a responsible employer through a simple investment. It may sound too good to be true, and they do say that it is difficult or near impossible to work with children. However, as an entrepreneur, you already know that you will reap what you sow.

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