Part 2: How Much Do I Pay My Employees?
In my last blog post I highlighted different resources to help you determine how much to pay your employees. There are a variety of websites you can use, including salary.com and payscale.com. You can also reach out to current industry contacts or contacts that may have left the industry to compare pay data. Another idea is to consider asking prospective employees what pay they are looking for. And last, but maybe most important, I touched on knowing how much you can afford to pay employees.
In order to know if you can afford an employee, you need to know the total employer cost of that employee. To calculate the estimated total employer cost, start with the annual salary. Next, add your projected annual federal and state unemployment taxes. Now, figure out what your annual contribution would be for any benefits, such as medical insurance, dental insurance, 401k, etc. Next, think about any other monetary benefits that you would need to add to your total, such as sick days, vacation days, bonuses or profit sharing. Lastly, don’t forget to add in any equipment that you would need to purchase for this employee, like a laptop or cell phone.
Once you have all of these estimates added together, you have your total employer cost of an employee. Now that was a long list of numbers to add up, so let us help you! Contact Lance CPA Group to help you plan for your next hire!