Over the last several years, we have seen a considerable increase in new businesses and individuals working for themselves. Many of these small business owners have become quite successful as a result of keeping their labor force minimal or even non-existent. However, some are finding it difficult to maintain the volume of business needed to remain competitive. Therefore, business owners have been forced to make a decision as to whether they should start hiring employees or increase their current staff to keep up with the pace of meeting their customer demands. This can be a difficult decision, since most often employees can be the most expensive investment your business makes.
When making a decision, it’s important to first calculate the real costs of hiring a new employee. While the percentage varies from industry to industry and from business to business, an employee could costs as much as 40% more than the base pay. These costs include federal and state taxes, health insurance, worker’s comp insurance, paid time off, and retirement benefits. In addition, a business owner must think about the other costs associated with hiring and training a new employee and other hidden costs like perks that employees have come to take for granted.
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