In this economy and unfortunate period of all time highs in unemployment rates small businesses are being more careful than ever when determining how much help they need. Of course everyone thinks it is a great thing when your small business begins to grow and you need to take on employees in order to balance the work requirements. Think again. The costs included in hiring, training, and continuously employing staff members can be very high, even higher than the potential profit increase from expanding the business might be. Costs that can go into a new employee range from federal and state taxes, health and worker’s compensation insurance, paid time off, as well as time spent for training the new individual. A recent article highlighted on CNN Money indicates that on average an employee who is paid $14 per hour might cost the company as much as $20 per hour. The government is offering tax breaks to employers who hire the unemployed, but is that enough? Payroll for a small business can account for as much as 70% of its operating expenses, as indicated in the article. In some cases it may be more beneficial and cost efficient for a business owner to step up their hours and try to cover the additional work themselves.

Now what about those hidden costs? You know, the costs that you don’t necessarily think of when you consider hiring on an employee or more employees. These include all of the small and large fringe benefits, such as coffee and water, daycare, additional office supplies and services. When running the business alone there are fewer regulations and costs to include than when you take on an employee even part-time. Now consider what it would cost the company when they hire the wrong person. The company then loses all of the hiring costs, which can include background and drug tests as well as all of the material costs and time wasted on training. These are just a few things that business owners need to consider when deciding whether or not their bottom line can take a hit on a new employee or if they can just handle it themselves.
Share To:

Jennifer Ulrich

Post A Comment:

2 comments so far,Add yours

  1. This blog was very enlighting I am a small business owner and I work for a large company as well. I have consicered some of these issues but I was not aware of all of the comcerns. These figures could show why people are going out of business so often. You really need to on top of all aspects of the business when the buck stops at your desk.

  2. Take a closer look at ObamaCare, and see the hidden costs that even congress overlooked. THEY ARE THE EXPERTS MAKING LAWS FOR OUR COUNTRY !!!!!!