What Are Fringe Benefits?
Fringe benefits are additional compensation provided to employees or shareholders outside of their direct wage or salary. These benefits can take many forms, such as company cars, expense accounts, discounts on company products, private health plans, subsidized meals, cheap loans, gym memberships, and other non-monetary perks. For shareholders, fringe benefits can include discounts on company products or services, holiday gifts, and similar perks.
Types of Fringe Benefits
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Employee Benefits:
- Company Cars: Vehicles provided by the company for personal and professional use.
- Expense Accounts: Reimbursements or accounts for business-related expenses.
- Discounted Company Goods: Employees can purchase company products at reduced prices.
- Private Health Plans: Comprehensive health insurances provided to employees.
- Subsidized Meals: Meals available at a reduced cost in company cafeterias.
- Cheap Loans: Loans offered at below-market interest rates.
- Gym Memberships: Free or subsidized access to fitness centers.
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Shareholder Benefits:
- Discounts on Products/Services: Shareholders receive products or services at discounted prices.
- Holiday Gifts: Seasonal or promotional gifts provided to shareholders.
- Other Perks: Various benefits that can enhance shareholder satisfaction or loyalty.
Examples
- Google provides free meals and snacks, on-site health and wellness centers, fitness facilities, and concierge services.
- Apple offers discounted products, comprehensive healthcare, and educational assistance to its employees.
- Starbucks provides stock options, free coffee, and health insurance to its employees.
- Amazon has programs for employee relocation and financial counseling.
Frequently Asked Questions (FAQs)
What are fringe benefits?
Fringe benefits are additional compensation provided to employees or shareholders outside their direct wage or salary. These can include company cars, health plans, discounted goods, and more.
Are fringe benefits subject to taxation?
Some fringe benefits like company cars and expense accounts are subject to taxation. The tax treatment varies depending on the type of benefit and the jurisdiction.
Why do companies offer fringe benefits?
Companies offer fringe benefits to attract and retain employees, increase job satisfaction, improve employee health and well-being, and enhance company loyalty.
Do all employees receive fringe benefits?
Not all employees may receive fringe benefits; it often depends on the company’s policies, the employee’s position, and length of employment.
Can fringe benefits be offered to part-time employees?
Yes, some companies extend fringe benefits to part-time employees, although the benefits might differ from those provided to full-time staff.
Related Terms
- Benefits in Kind: Non-cash perquisites that are provided in addition to wage or salary.
- Perquisites (Perks): Additional privileges provided to employees, often higher-level or senior employees.
- Employee Benefits: All indirect and non-cash compensation provided to employees.
- Compensation Package: The total payment and benefits an employee receives from an employer.
- Stock Options: The opportunity for employees to buy company shares at a future date at a predetermined price.
Online Resources
- Internal Revenue Service (IRS) on Fringe Benefits
- SHRM (Society for Human Resource Management) on Employee Benefits
- Investopedia on Fringe Benefits
Suggested Books for Further Studies
- “The Employee Benefits Answer Book” by Rebecca Mazin
- “The WorldatWork Handbook of Total Rewards: A Comprehensive Guide to Compensation, Benefits, HR & Employee Engagement” by WorldatWork
- “Strategic Benefits: Flexible Benefit Plans for Today’s Workplace” by Amanda Lanier
- “Employee Benefits Design and Planning: A Guide to Understanding Accounting, Finance, and Tax Implications” by Bashker D. Biswas
Accounting Basics: “Fringe Benefits” Fundamentals Quiz
Thank you for delving into the world of fringe benefits. Keep exploring to master the various facets of employee and shareholder perks in accounting and financial management!