If you’re a business owner, you’re always looking for ways to reduce costs and increase spending efficiency. Depending on the type of business you operate, staff wages are often one of your most substantial expenses.
This is undoubtedly the case for businesses that bid on government contracts. If your company currently works on government contracts, you will be expected to offer a prevailing wage to your employees. This can have a marked impact on your fixed costs.
As a cost-mitigation technique, many savvy business owners have started using prevailing wage pension plans to reduce their outgoings.
So, what is the prevailing wage, and how can prevailing wage pension plans improve your business? In this blog, we’ll explore the key details surrounding this subject to help you improve your business’s viability.
What is the Prevailing Wage?
The prevailing wage refers to a pre-determined wage level that is expected to be paid to workers from companies that bid on government contracts. Typically, the prevailing wage is the wage that most people in a specific industry or role receive. It is often determined by unions.
Ways Prevailing Wage Pension Plans Help You Improve Your Business
If you’re searching for ways to mitigate the increase in wages that government bid regulations require, a prevailing wage pension plan is one possible solution. Let’s explore the three primary ways that this type of pension plan can help you increase your business’s viability.
The primary way prevailing wage pension plans allow you to reduce costs is via the payroll tax. By offsetting the initial wages you provide to your staff, you can lower your payroll tax liability. It’s an excellent way to reduce your upfront costs if you’re bidding on government contracts.
Not only can you reduce your payroll tax costs, but you can also reduce your general liability premiums. Depending on your industry, a reduction in your general liability premiums can have a serious impact on your bottom line.
Offer More Competitive Bids
In an increasingly competitive contract bidding environment, it’s more critical than ever to provide the most affordable quotes for government contracts. By reducing your payroll tax and general liability premiums, you’ll be well-positioned to offer the most competitive quotes during the bidding process. This can drastically improve your revenue capabilities.
Increase Your Margins
As a business, if you’re able to reduce your costs and win more contracts, your profit margins will naturally increase. At the end of the day, as a business owner, remaining as profitable as possible is the key to your long-term success.
Verdict: Creativity Can Help Your Improve Profitability
It’s easy to get caught up in the operational aspects of your business. If you’re too busy to take advantage of cost-saving measures, you won’t be well-positioned to improve your profitability and grow your business. Sometimes a little creativity can go a long way in helping your business achieve its goals.
At Davis-Bacon Pension Plans, Inc., we help businesses improve via the use of prevailing wage pension plans. If you’re ready to explore this cost-saving method in more detail, contact us today at (425) 889-8855.