For your budget to be accurate, you need to account for the cost of every employee. Your finances should have more than their salary calculated in. There are many other forms of compensation that you need to have funding and documentation for. Fricke & Associates, LLC can help you plan for every employee and keep your accounting balanced properly. Remember these important expenses when you are budgeting for a new employee.
· Payroll Taxes—The payroll tax is the money withheld from an employee’s wages for the employer to pay to the government for them. You need to plan for this expense as a part of your employee compensation. Although the amount can vary, the payroll tax may be 7% of an employee’s pay, which is ultimately put towards funding Medicare and social security.
· Paid Time Off—The Department of Labor does not require employers to provide their employees with paid time off. Paid time off is a strong incentive for attracting high-quality employees though. If you are planning to offer paid time off to your employees, make sure that you have budgeted for this expense ahead of time.
· Health Insurance—For companies with fewer than 50 employees, there is not a legal mandate for health insurance. Health insurance is of great importance to most employees. Insurance policies can vary regarding the contributions of the employer, but employers paying half of the insurance premium is a common expectation. On your budget, prepare for the cost of your contributions to insurance.
· Retirement Savings Benefits—Other than health insurance, retirement is likely the most important benefit to your employees. There are a variety of options for helping your employees plan for their retirement from 401Ks to IRAs to pensions. We can help you figure out what retirement options you can offer to your employees that will be beneficial to them and you. Many plans involve either mandatory funds withheld from pay or employees choosing to contribute for employer matching compensations.
· Overhead Costs—Overhead costs can be company-wide costs, such as rent, equipment, utilities, etc., that you divide out based upon all your employees or expenses directly connected to one employee. For example, if your employees need a company computer and car to complete their daily work, you will need to account for these costs that are necessary for this employee to work.
Employees are more than just a monthly salary. There are so many more financial caveats to plan for. Fricke & Associates, LLC can help you stay on top of your accounting, bookkeeping, and payroll. We are committed to your company’s financial success!