If you are a contractor performing projects (services) subject to The Davis Bacon or The Service Contract Act, there is no better way to save bottom-line dollars than installing a bonafide fringe benefit plan.
When working on a public works job contractors are required to pay a “fringe” amount for every hour, each employee works. Paying the fringe as cash wages, while legal, is the most expensive method because all wages are subject to the following payroll burden*:
- FICA Contributions
- Workers Compensation Premiums
- General Liability Premiums
- Federal Unemployment Taxes
- State Unemployment Taxes
The net result is that for every fringe dollar paid as wages unnecessary payroll taxes are incurred. On average, this amounts to 25% or $.25 on every dollar. The most effective way to avoid this payroll burden is with a fringe benefit plan.
Fringe Insurance Services specializes in helping contractors direct fringe benefit dollars into bona fide employee benefit plans, thus avoiding unnecessary payroll burden. (See our sample savings example on the right or use the savings calculator to estimate your own savings.) Bona-fide fringe benefit plans include:
- Qualified Retirement Plans
- Hour Banked Health Plans
- Flexible Spending Account Plans