Hiring a new employee is a necessary part of expanding your business, but doing so will come at a cost. Before you decide to do this, you need to determine if investing in more labor is worth the money generated from extra work. In most cases, this will balance itself out to yield more money for your cleaning company. You just have to make sure the numbers add up properly.
Here is a look at the actual cost of hiring a new employee so you can determine if this is the right move for you.
New Employee Wages
Some small business owners choose to pay their employees minimum wage, but most will offer slightly more money than that for loyal employees who do good work. You may start off paying minimum wage for your new employee during the trial employment period, and then bump the pay by $1-$2 an hour, or a salaried rate. If you have enough work to support a full-time apprentice, you may be better off paying the person a salary, rather than by the hour. This will save you from paying overtime, should a project last longer than normal. For part time employees though, a flat hourly rate is always best.
Other Employee Costs
In addition to paying your employee’s wages, you will need to cover required employee benefits, such as:
- Social Security
- Medicare
- Workers compensation
- State Taxes
- Federal Taxes
This money will not go directly to your employee, but rather the government agency it is designated for. You may be able to take some of this money from the employee’s wages, depending on the structure you set up for payments.
Using An Estimator To Determine Your Employee Costs
The easiest way to answer “How much will a new employee cost me?” is to use an online calculator to approximate your expenses. We like the calculator developed by Jo Landers Business Services because it offers options for required and optional benefits you may extend to your employees. You can get a clear picture of what you will pay for your employee, and then you can make plans from there.
Is A New Employee Worth The Cost?
Using the value you get from your employee cost calculator, you can decide if the added work you will generate will cover your expenses. Remember that you will be able to complete your jobs faster with multiple people working, or you may be able to complete two jobs at once. Add up the new income you expect to get and see if you yield a profit in the end. If so, you can start the process of looking for your new employee.