Whether as a result of a booming economy, tighter immigration laws or an educational system gone astray, finding qualified job applicants has become increasingly more difficult for those in the shooting sports equipment industry. A major problem for many businesses is their inability to fill a record number of open jobs. Employers are begging for workers to fill jobs, skilled and unskilled alike.

Even more troubling for many smaller firearms retailers is the question of how they can compete for badly-needed, qualified workers? How can any business compete for the ever-dwindling number of workers available in today’s marketplace? And, equally important, how can a firearms business keep the workers who are so essential to its success and afford to compete for the new workers needed to help it grow?

Paying Better Than The Competition

Surprisingly, survey after survey shows that it is not money alone that attracts new workers and keeps existing employees on the job. It is the benefits. In fact, currently treasured by job seekers — and employees — are flexibility and the opportunity to balance work with other life responsibilities, interests and issues.

While pay isn’t the primary goal of many job seekers, every shooting sports equipment retailer should keep in mind that, in today’s job market, compensation is still an important factor. By surveying the local job market and the compensation offered by others in the field, the firearms retailer can pay better than average to attract the best candidates.

Obviously, no shooting sports equipment operation can be an employer of choice without a good benefits package. Job training, educational assistance and employer-provided vehicles used for business are among the popular — and often necessary — working-condition fringe benefits offered by many small businesses.

Fringe Benefits

When it comes to attracting, hiring and retaining talented employees, fringe benefits can help a small firearms retailer business compete with larger rivals that may have more resources and deeper pockets. In many cases, this can be accomplished without adding to the operation’s or the employees’ tax burden.

Thanks to our unique tax laws, every tactical retailer can afford to offer fringe benefits to their workers, and may even be able to benefit themselves. That’s right, our tax laws merely prevent employers from discriminating in favor of owners, key employees or other highly-compensated individuals when setting up any benefits plan that is to be tax deductible by the business and tax-free to the recipient.

These fringe benefits or additional job perks are treated as compensation by an employer but are generally not included in the worker’s taxable income. Tax-free fringe benefits include health benefits which are, by far, the single most important perk. Health benefits include providing employees with health, dental and vision insurance and paying uninsured health-related expenses.

Benefits To Attract And Retain Workers

Benefits offered by the shooting sports retailer should also be above industry standards and new fringe benefits added when they are affordable. Naturally, educating existing employees about benefit availability and costs helps them appreciate that their needs are being addressed.

Job seekers and employees are increasingly looking for cafeteria-style benefit plans in which they can balance their choices with those of a working spouse or partner. Profit sharing plans and bonuses that pay employees for measurable achievements and contributions are also invaluable.

BONUSES: Bonuses and awards must be included in an employee’s taxable income. Should the bonus or award be in the form of goods or services, employees must include the fair market value of those goods or services in their income. The same applies to holiday gifts. However, employees receiving turkeys, hams or similar items of nominal value from their employers at Christmas or other holidays may exclude the value of the gift from their income.

PROFIT-SHARING PLANS: A profit-sharing plan, often called a “deferred profit-sharing plan” (DPSP), is a plan that gives employees a share in the profits of the shooting sports equipment business where permitted under local licensing laws. Under this type of plan, an employee receives a percentage of the operation’s profits based on its quarterly or annual earnings. This is a great incentive to attract new workers and give employees a sense of ownership in the business. Not too surprisingly, however, there are restrictions as to when and how a person can withdraw those funds without a penalty.

The contribution limit for a retailer sharing its profits with an employee is the lesser of 25 percent of the employee’s compensation or $55,000. In order to implement a profit-sharing plan, the business must file a Form 5500-series return/report and disclose all participants of the plan. Early withdrawals, just as with other retirement plans, are subject to penalties. 

ESOP: An Employee Stock Ownership Plan, or ESOP, is an employee-owner program that provides workers with an actual ownership interest in the firearms business — tax-free. An ESOP is a qualified defined contribution employee benefit plan designed to invest primarily in the stock of the employer.

In general, employees are given ownership with no upfront cost. The shares provided can be held in trust for safety and growth until the employee retires or resigns. At that time, the shares go back to the retailer for further redistribution or are completely voided.

The Cheapest Can Be The Most Rewarding

Minimal fringe benefits, often called “de minimis” fringe benefits, include any property or service provided to employees that has such a small value that accounting for it would be unreasonable. These benefits are not taxable to workers.

Among minimal fringe benefits offered by many firearms retailers include: 

1. Occasional tickets for entertainment or sporting events
2. Holiday gifts (other than cash) with a low market value
3. Coffee, donuts or soft drinks
4. Occasional meal money or local transportation fare for employees working overtime and for meals provided to allow employees to work overtime
5. Occasional use of the operation’s copier
6. Group term life insurance of $2,000 or less payable on the death of the employee, his or her spouse or dependent

Cash is not included as a minimal fringe benefit, no matter how small the amount (with the exception of occasional meal money or local transportation expenses). On a similar note, the IRS considers frequency a key consideration when determining if a benefit is minimal.

Party Time

A business with a happy workplace is often an attraction for job seekers. Whether it’s a nightclub affair or a buffet in the store’s break room, parties are a tried-and-true benefit. And, in addition to making employees feel valued and keeping them motivated, parties have tangible tax benefits.

The tax rules allow a business to throw a holiday party — even a relatively fancy one — with no tax consequences to the employees. Of course, in order to be deductible, the IRS requires the party cost to be “reasonable.” No business can deduct expenses for entertainment that are “lavish or extravagant.”

Job Training And Educational Assistance

On-the-job training provided by an employer is a tax-free hiring incentive as well as an invaluable “perk” for current employees. Educational assistance and tuition reimbursement are also welcome fringe benefits.

A firearms retailer with a formal, written educational assistance plan isn’t required to immediately fund the plan, only reimburse an employee’s educational expenses — up to $5,250 per employee, per year and exempt from tax. Educational assistance doesn’t just include tuition assistance, but also payments for books, equipment and other expenses related to continuing education.

Tax Reform

Tax savings obviously make benefits an attraction. However, thanks to the Tax Cuts and Jobs Act (TCJA) passed late in 2017, the array of tax-free fringe benefits employers can provide employees is not quite as generous as it used to be.

Last December’s TCJA included important changes to the tax treatment of employer-sponsored benefit programs. The new law restricts an employer’s ability to deduct many common business expenses, such as meals, entertainment and employee moving expense reimbursements. On the upside, the law also included a new tax credit for employers who provide paid family and medical leave for their employees.

The Bottom Line

Today, the majority of employers in both the private and public sectors offer their employees a variety of benefits in addition to salaries and wages. In fact, in order to attract talented individuals to work for the shooting sports equipment business, as well as to retain qualified employees, today’s employer must offer fringe benefits and other perks.

Once it has been determined what benefits will best attract badly-needed workers in today’s job environment, which benefits employees would prefer, and figured which benefits the operation can afford, then and only then will it be possible to make an informed choice of which benefits will attract job applicants, benefit the tactical retailer and its employees the most.

Knowledge is essential when deciding which benefits work in today’s job market — as are the services of a qualified professional. But, wouldn’t it be ironic if those benefits turned out to be the ones that cost your operation the least?