How much does an in-house employee really cost?

How much does an in-house employee really cost? When hiring a new employee, managers typically only consider salary as the cost for each employee. While business owners consider all costs involved in not only hiring but employing each employee.

Hiring is a difficult yet important activity. It is imperative to keep the company running smoothly and especially during rapid growth. Delay in hiring and you will have trouble meeting your plan, hire too quickly and you may burn through cash before revenue catches up. Add to that the fact that it is a rare case when you can contract exactly to meet your needs. The following expenses must be considered to obtain realistic figures while preparing your personnel budget.

Recruiting expenses

Finding technically qualified people to work effectively in a position can be not only difficult but time-consuming. Using a headhunter to recruit a potential in-house employee, delegating this task to another employee or spending the time recruiting yourself comes at a cost. This expense of your in-house employees must be factored into your budget.

Base salary

Base salaries vary depending on a variety of factors. This is the baseline number that factors into the true expense for each employee. According to the Bureau of Labor Statistics, this baseline number only accounts for an average of 68.2% of the total cost per hour per employee.

Employment taxes

While preparing your personnel budget you must include employment taxes. These taxes include Social Security, unemployment and Medicare. Workmen’s Compensation premiums must also be considered and will vary depending on the category of the employee.

Benefits

In most cases, you will need to provide some benefits. Typical base benefits offered are medical insurance and life insurance. Other benefits could include long-term disability insurance, dental plans, dependent care assistance, tuition reimbursement, retirement plans etc. Determine your cost including not only employer contribution but also administrative costs.

Equipment and software

The basic equipment needed by an employee is a computer and telephone.

Even with decreased computer prices, consider $1000 plus For a computer, $500 to several thousand for software And $250-$300 for a telephone headset. Do not forget when budgeting to consider periodic updates, necessary upgrades and IT support both during set up and when there’s an issue. This also does not include any necessary training employees may need.

In-house employees average 31.8% in overhead expenses. This does not factor in your time or the wasted funds and efforts involved if the employee turns out to not be a “good fit.” Using virtual assistants saves on employee cost and frees up your time to focus on the important tasks.