You’ve been working hard to add clients to your business and are finally at a place where you think you can afford to hire your first employee. That is a huge step for a small business owner. Before you make that leap, make sure you know exactly how much that new employee is going to cost. Here are 7 Employement Costs You Should Know About.
Make sure you know what the minimum wage is in your area and what your competitors are paying for similar positions. Take a look at job postings for similar positions to get a feel for the prevailing rate. You don’t want to overpay for work but you may have trouble finding someone to take the job if you underpay. Don’t forget about overtime pay. That can be a significant hidden cost for employers.
Employers are responsible for Federal taxes and in some cases state payroll taxes. Check out this site to get an estimate of applicable taxes for your state:
Worker’s Compensation Insurance
Most states require that you carry Worker’s Compensation insurance. This type of insurance covers medical care for on the job accidents. Check with several insurance agencies to get a quote for your area.
Most states require employers to pay an unemployment insurance tax on payroll. Some employers can qualify for exempt status if their payroll totals are below a specified amount or they fit into a certain type of employer category.
ACA mandated health insurance coverage only applies to employers with 50 or more full time employees. However, you may want to offer supplemented health insurance coverage to your employees. Make sure to shop around for the best rates and check out healthcare.gov for goverment supplemented options for small businesses.
Paid Time Off
Several states have recently mandated paid sick leave for employees regardless of their part-time or full time status. The cost of offering this time off should include both the expected wages for the regular employee and any wages for hiring a substitute to cover the employee’s duties.
Whether you are running the payroll checks yourself or paying an accounting firm to do it, there are costs involved. Make sure you include the cost of the payroll software and your time to create the payroll checks, pay applicable taxes, and complete tax reporting requirements. Payroll firms are typically very competitive and often times the cost to outsource is well worth eliminating the stress and hassle of completing the work yourself.
If you would like to learn more, check out the links below and contact us to set up a free consultation to discuss your business needs.
Sarah Judson is a lifelong equestrian with a passion for finance. She has combined these two interests with Brave Accounting, a financial services firm focused on serving the equestrian industry.