Looking at your budget and now ready to hire?
Every new business owner struggles with when to hire employees, hiring the right employees, and whether or not they can afford it. A common question that tends to come up is "How much does this employee actually cost?" This is important to know when doing your budget. The business owner needs to account for all the costs associated with the employee and not just the hourly wage or salary wage given.
First, let's just start with the bare minimum. In GA, a business owner can expect to pay about 11% more than just the employee hourly wage or salary wage given. Where does this 11% number come from? As everyone knows, the employer is required to withhold Social Security and Medicare from the employees income**. What some new business owners forget is that they have to pay the company portion of Social Security and Medicare as well. This additional amount is equal to 7.65% of the employees pay. Next, there is State and Federal Unemployment. In GA, a business just starting to have payroll will start out with a State Unemployment rate of 2.7% . The Federal Unemployment rate in GA currently is 0.9% (with credit reduction). A lot of new business owners are shocked when they file their first payroll reports. So a business owner just starting out with payroll needs to budget about 11% more than the actual wages.
Above is just the minimum. Other factors that need to be considered are workers compensation insurance, supplies for employees, office space requirements, training, and employee benefits.
If you have any questions regarding employees and payroll please contact us or leave us a comment.
**Payroll taxes withheld from employees payroll is referred to as Trust Fund Taxes