There are strong advantages and disadvantages to offering retirement benefits.

The pros. Here are some reasons why you might want to offer a retirement plan:

• You can receive some significant tax advantages for your business (because Congress wants to encourage employers to provide retirement benefits to employees).
• If the plan is based on profits, the plan may enhance employee motivation and productivity.
• Retirement benefits may give you a recruiting advantage.
• You can use the plan to save for your own retirement.
• If your business has high start-up costs or little cash on hand, you can use a retirement plan to supplement your compensation package.

The cons. Here are some reasons why you might want to forego offering a retirement plan:

• Setting up and administering a plan can be time-consuming, complicated, and costly.
• Providing a plan can (and most likely will) require professional assistance, which can be expensive.

More than likely, if you're just starting up, you're going to have greater worries than the intricacies of how a retirement plan can best serve your needs. If anything, there are other less burdensome, more valuable benefits that you can provide to your employees, such as health insurance, time-off benefits, disability insurance, and life insurance.

If you're still considering a retirement plan, make sure you understand the basic differences in plan types. Then you should try to determine why you want to offer a plan and what your goals are.