Why Most Businesses with 10+ Employees Are Overpaying the IRS

Are You Overpaying Payroll Taxes? Most Businesses with 10+ Employees Are.

If you have 10 or more employees, there’s a good chance your business is sending more money to the IRS than it actually has to.

Not because you’re doing anything wrong.Because most business owners were never shown a better way.

At Foss Financial Group, we’ve been helping business owners uncover a simple, overlooked opportunity tied to something called Section 125. When structured correctly with a modern health and wellness program, it can create meaningful tax savings for both the company and employees.

And the surprising part?It doesn’t require changing your health insurance, payroll, or employee wages.

What Is This Health and Wellness Strategy?

Section 125 has been part of the tax code for decades. It allows certain dollars to be treated pre tax instead of after tax, reducing taxable income.

In the past few years, newer health and wellness program designs have expanded how businesses can use this structure.

When set up correctly, it allows:

• Employees to keep more of their paycheck• Employers to reduce payroll taxes• Businesses to improve overall profitability

All while keeping current systems in place.

Why Most Businesses Miss This

Most companies assume:

“My CPA would have told me.”“My payroll company would have set this up.”“My insurance broker already handled this.”

In reality, that almost never happens.

Why?

Because this sits in a unique space between payroll, benefits, and tax strategy. If no one is specifically looking for it, it gets overlooked.

What Actually Changes?

Here’s the key point most business owners care about:

Nothing changes operationally.

• Your health insurance stays exactly the same• Your payroll process stays exactly the same• Employee wages do not change• No new plans replace what you already have

This is simply a tax structure adjustment that works alongside what you’re already doing.

What Does the Outcome Look Like?

When this is implemented correctly, the results are straightforward:

Employees often take home an additional $1,000 to $3,000 per yearEmployers typically save around $700 per employee, per year in payroll taxesBusinesses gain a turnkey health and wellness program that supports retention

For a company with 10 to 50 employees, that can translate into:

• Thousands of dollars back to the business annually• Tens of thousands collectively back to employees

Without increasing payroll.

Why This Matters More Than Ever

Labor is expensive.Turnover is expensive.Taxes are unavoidable, but overpaying them is optional.

Business owners today are looking for ways to:

• Retain good employees• Improve take home pay without raising wages• Increase profitability without cutting corners

This strategy checks all three boxes.

Is This Really “Free Money”?

It’s not a loophole.It’s not a gimmick.

It’s a government-backed tax advantage that already exists within the system.

The reality is simple:

If it’s not set up correctly, the money goes to the IRS.If it is set up correctly, more of that money stays with your business and your employees.

Who This Is Best For

This tends to make the most sense for businesses that:

• Have 10 or more employees• Run steady payroll• Want to improve margins without increasing expenses• Care about employee retention and satisfaction

Industries like construction, trades, manufacturing, automotive, and service-based businesses often see the strongest impact.

What’s the Next Step?

The first step is not a commitment.It’s simply finding out if this applies to your business.

At Foss Financial Group, we use a simple, high-level worksheet to calculate potential savings. It does not require sensitive information and takes just a few minutes to complete.

From there, you’ll know:

• Whether meaningful savings exist• What it could look like for your team• Whether it’s worth implementing

No pressure. Just clarity.

Final Thought

Most business owners don’t mind paying their fair share.

But almost no one wants to pay more than they should.

If you have 10 or more employees, it’s worth taking a closer look at whether your business is leaving money on the table.

Because if this isn’t in place…

You’re likely overpaying on taxes when you don't have to.

Gabriel

gabe@fossfinancialgroup.com