Cost to have employee

[artorias]

Can someone explain how to figure out the real cost of having an employee if you pay $16 an hour? No benefits. Just PTO. Are there any advantages for the business vs contracting work? I prefer having an employee. Husband wants to use contractors. We are a small business- no employees yet, but we need a customer service position. Colorado.

[valkyrie]

7.65% employer match for Social Security and Medicare. Federal and State Unemployment tax. State at probably 1.5%, and maybe 1% for federal. Unemployment is taxed on the first $7,000 of wages, and State at varying levels. Unemployment taxes are not the same state to state nor company to company.

Workman's Compensation is a private insurance you should (must) use to cover employee injury while working. This rate is dependent on what the worker does. Check with your professional organization for guidance. E.g. your small business association in your state. Budget 2%.

Payroll processing fees will be a big percentage is you only have one employee. Check online processing companies for rates.

You will need to fill out monthly state tax forms, quarterly state and federal unemployment tax forms, be audited (payroll only) by your workmans comp company annually. Have employees fill out W4 and I9 forms and you need to make W2's each year.

There's probably more.

[vordt]

Generally speaking, calculating the true value of your employee can be really difficult as you will have to consider a lot of factors and variables. I also spent a long time trying to figure out how to properly calculate employee cost until I was lucky enough to come across employee cost excel (https://beebole.com/blog/how-to-calculate-the-real-cost-of-an-employee/). On this site I was able to find a great calculator that has become an indispensable tool for my business. I hope I have helped you!