Finding a balance between quality and quantity when building a team is one of the biggest challenges business owners face. You ultimately want a team that is large enough to meet the demands of the company and the needs of your clients without hurting the bottom line. It’s essential to consider the costs of expanding the team before actually doing so, however. Below, Gingrich & Associates PC, a payroll services provider in Freeburg, PA, explains how much a single employee can cost the company.
5 Costs Your Company Might Incur for Every New Employee
1. Payroll Taxes
The larger your team is, the more you will have to set aside for payroll taxes. Employers must contribute 6.2% of every employee’s salary to Social Security and 1.45% to Medicare. For this reason, outsourcing departments that might have some of the highest salaries in the company, like accounting, makes fiscal sense. You will have to pay for bookkeeping and payroll services, but you will not have to cover payroll taxes or any of the other costs mentioned below.
2. Paid Time Off
Pennsylvania law does not require employers to provide their workers with paid time off for sick leave or vacation; however, offering such benefits can help companies remain competitive and attract the most talented individuals in the industry.
3. Health Insurance
There is no state law in Pennsylvania that requires employers to provide health insurance benefits, but those who do offer this perk must purchase policies that cover certain mandated benefits. Additionally, under the Affordable Care Act, large businesses with more than 50 full-time employees must pay a tax penalty if they do not offer health benefits.
4. Retirement Contributions
Retirement contributions are another major benefit that will attract bright leaders in the field. Depending on how the plan is structured, offering retirement benefits can also help quell a high turnover rate, which could save the company a considerable amount of money in the long run.
5. General Overhead
Unless you are hiring traveling salesmen or individuals who work from home, there’s usually a higher overhead when you gain new employees. This includes office space, training hours, equipment and supplies, additional payroll services, and other items your employees need to perform their job duties.
If you want to weigh the pros and cons of expanding your team, turn to Gingrich & Associates PC. Based in Freeburg, this accounting firm is proud to help businesses and individuals throughout Harrisburg, Milton, Sunbury, Liverpool, and Mount Pleasant Mills. Their comprehensive offerings include payroll services, tax preparation, and estate planning. Visit their website to schedule an appointment, or call (570) 374-4956 to discuss your needs with a professional today.