“Well, I want to go out without tearing my bed, now. I’s so scared my baby quit and I can’t afford to do it, I can’t afford to do it, I can’t afford to do it. And lose that girl of mine.” -Fleetwood Mac
When you hire an employee there are costs you MUST pay. These 3 I have listed are the bare minimum you’ll be paying for an employee. If you can not cover these costs, then you are not ready to hire!
1) Gross wages are the fixed, regular payments you make to your employees. These are the earning before taxes and are either paid hourly or salary.
2) Payroll taxes are required to be paid every single time you run payroll! These are the employer side of federal and state taxes. Employer payroll taxes cover half of your employee’s FICA taxes, which are their Social Security and Medicare. This rate is 7.65 percent of the employee’s wages.
Employers also have to pay state unemployment insurance (SUI) and any local taxes. Every state has a different SUI rate.
3) Payroll service expenses help process the payroll and files state and federal payroll reports and payments. These are major time savers but they come at a price. Depending on the level of service and number of employees, most range from $30-$100 per month.
Other employee costs may include benefits and the expenses associated with the hiring process. These may include job posting fees, tools or equipment, uniforms, and time tracking software.
Please look at your monthly budget and decide how much you can realistically afford to pay a new employee! You don’t want to put time and effort into the hiring process only to realize….I can’t afford to do it!
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