I need some educated pricing help

Discussion in 'Business Operations' started by JCLawn and more, May 19, 2012.

  1. JCLawn and more

    JCLawn and more LawnSite Fanatic
    from MI
    Posts: 5,204

    Ok I just started having an employee and I started to notice something. My pricing this year is about 50 a hour. I am 10 or more per hour more than the average company in my area. Now when I work my employee on the job we make $70-$100 a hour working, but when I do the total day average its like 45-55 a hour between the 2 of us. So here is my question. I am doing a 1099 with because he actually has his own company and I pay him 12 a hour. So when I pay him I am making 32-40 a hour and with all expenses payed I am making 20-30 a hour personally. Now if I hired someone on and payed employment taxes and workman comp would this run me out of house an home? I would like someone to tell me how much more roughly I would be paying to put someone on pay roll.
     
  2. JCLawn and more

    JCLawn and more LawnSite Fanatic
    from MI
    Posts: 5,204

    Anyone?
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  3. SSmith

    SSmith Banned
    Posts: 447

    I think it's about 25-33% more.

    So, $10/hr. would become around $13/hr.
     
  4. JCLawn and more

    JCLawn and more LawnSite Fanatic
    from MI
    Posts: 5,204

    So that would cost an extra $600 a month. So it their advantage to put him on pay roll?
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  5. SSmith

    SSmith Banned
    Posts: 447

    At this point I don't think so.
     
  6. TuffWork

    TuffWork LawnSite Senior Member
    Posts: 507

    When you have someone on payroll they pay about 15% or so and you have to match that. A good rule of thumb is to plan on someone costing you about 1.5 times what you pay them. That's before all the taxes you pay on all your own profit. Income tax, self employment tax, and sales tax if your state has those. If you decide to start payroll I recommend getting a payroll company to avoid headaches and sleepless nights caused by not knowing for sure if it was done right.
     
  7. JCLawn and more

    JCLawn and more LawnSite Fanatic
    from MI
    Posts: 5,204

    Well it looks like quickbooks online takes care of a lot of the headaches. I worked in a tax office so I a little bit use to accounting. I just don't like it lol. Thanks for the info though. 1.5 times what you pay them is 50 percent more, not 15.
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