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Thread: Cost of employee

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    Default Cost of employee

    I'm looking to hire my first employee. I'm wondering if someone could give me an estimate of the true cost/hour. If I want to pay her $15/hour how much is it going to cost me including all the required taxes, workman's comp, and whatever else I'm required to pay for. Also is workman's comp based on how many hours she works? I want to hire her full time over the holidays but just a couple hours a week now to train. Is that couple hours going to hurt me? Thank you!

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    The true cost is going to depend on the nature of your business, where you are located and the quality of the employee. For me, it was 2x his gross pay ($17/hour employee wound up costing me around $34/hour). Keep in mind that rework, mistakes, and initial/ongoing training will probably push that number higher.
    Brad Miedema
    Fulcrum Saw & Tool

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    If you really just need someone for the holidays you might want to consider a temp. If you are willing to pay $ 15.00 an hour it will likely cost you around $ 24.00 an hour but that includes everything and you have no paperwork except what they need which is just an original contract and a weekly report of the hours they worked.
    Ray Badger, Turbo Technologies, Inc.
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    Worker's comp insurance -- call your commercial insurance agent, or possibly your payroll provider. My payroll is not large enough to push the premium beyond the minimum, which is around $700 or $800 per year! But it could be different in different states or with different insurance companies. The program I am on, I pay the annual premium up front, and then at the end of an annual period, the company audits my payroll and makes adjustments accordingly (if your lucky, a rebate because your payroll was not as high as anticipated). Pay-as-you-go programs are another option (sometimes your payroll service provider can hook you up with one of these).

    Payroll Service -- yes, you can try to do your own payroll accounting in house, but you probably shouldn't (it's pretty complicated, with stiff penalties if you screw it up). I am paying about $30 per week....

    At a minimum you'll have to pay the employer's share of Social Security (FICA), Medicare, and Federal Unemployment (FUTA) taxes, and will have State Unemployment taxes as well. For the payroll I just processed, these ran about 11% of the total payroll.

    Did you want to account for your own time in searching for, hiring, training, overseeing, and taking care of all the paperwork, too?

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    Quote Originally Posted by cmicah45 View Post
    I'm looking to hire my first employee. I'm wondering if someone could give me an estimate of the true cost/hour. If I want to pay her $15/hour how much is it going to cost me including all the required taxes, workman's comp, and whatever else I'm required to pay for. Also is workman's comp based on how many hours she works? I want to hire her full time over the holidays but just a couple hours a week now to train. Is that couple hours going to hurt me? Thank you!

    One metric a lot of companies go by is that an employee's hourly pay should generate at least 4x the amount in sales.
    So 15 an hour, or $240 a day, should help generate an additional $960+ in sales a day.

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    Quote Originally Posted by Franklin View Post
    One metric a lot of companies go by is that an employee's hourly pay should generate at least 4x the amount in sales.
    So 15 an hour, or $240 a day, should help generate an additional $960+ in sales a day.
    That's a blue sky figure that might hold up in retail, but until the OP comes back and lets us know what his business is we are just pulling numbers and shooting in the dark.
    Brad Miedema
    Fulcrum Saw & Tool

  7. #7

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    Thanks for the replies. I didn't realize it was different if I hire a temp. I'd love some more info on that.

    I sell jewelry online and I need someone who I can train to have the skills by Christmas. Last year about 70% of my sales came in at Christmas and I had to work 16 hour days, 7 days a week for 2 months to get them out. It almost killed me...I was obviously completely unprepared and caught off guard. I was paying family to help and they were not able to do a good job.

    This year so far I have sold 3x as much as last, and I'm trying to do Christmas differently. I'm not worried about finding someone, just how to pay them legally and cover myself (not super dangerous but I work from my home and use torches and power tools).

    Thanks for your help.

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    You might look into whether your state offers any kind of support for apprenticeship programs....

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