small business owner(81417)

For many small businesses, the mere prospect of traditional insurance can make you want to close up shop, fearing that you will be unable to handle or subsidize the health care needs of your employees. While the robust and all-encompassing insurance plan is generally embraced by large businesses with many employees and capable of weathering – even thriving under – the tax burden, few are the options available to sole proprietorships and small outfits comprised of just a handful of employees. One potentially attractive option doubles as a bit of a tax secret for small business; the private health services plan. Although not exactly a new option, most people are simply unaware of it, and the benefits it can provide for you.

The essence of the private health services plan is to enable you to pay the medical/health bills of your employees, without the burden of taxation. Ordinarily, if an employee of yours (indeed, this extends also to you the business owner) pays for a medical procedure such as tonsil removal, they bear the full brunt of that expenditure. Even with most insurance plans, you can be responsible for the tax after the insurance plan handles the principle payment. However; with a private health services plan you the business owner pays for your employees’ applicable health costs, with no tax whatsoever applied to the principle; you can then claim the expenditure as a tax deduction from the profits your business makes at the end of the year or term.

The particulars of this tax secret for small businesses work as such: tax rates actually vary from employee to business, often being a lot higher for the individual than for the business. Let’s say you have an employee who sees a chiropractor, for example, and is charged $500 for the procedure. With your private health services plan in effect, the employee can submit this bill to the overseeing administrator for the plan, who then charges you the boss for $500, plus applicable fees, which never climb above 15% by Canadian law. Therefore your business releases $575 at most; and the overseeing administrator sends your employee $500, keeping $75. At the end of the term, your business can then deduct the full $575 that you paid from its profits, which shows why the private health services plan is a viable tax secret for small business.

The expenses garnered by your private health services plan administrator always end up being paltry compared to the after-tax incurrent that is normally the case when an employee must pay. Furthermore, your employee has free reign on deciding what her private health services plan will cover, up to the limit set by law. Just as importantly, it lets you know well ahead of time where your company stands financially insofar as health coverage is concerned; the tax secret for small business is just an added benefit should employees end up using the service. The actuarial math elimination of employees with already-present ailments is not an issue with a private health services plan, whereas it often lies at the heart of the structure of an insurance plan. Pre-existing ailments are covered just as surely as the ones to come; nor do you have to pay anything at all if some of your employees simply don’t get sick – compare that with insurance; where the monthly premiums are due rain, sleet or snow. Ultimately, while this tax secret for small business isn’t robust enough for expensive medical emergencies, it can serve to provide coverage for the small business that would be burdened by an insurance plan.