What are the costs of hiring the first employee?

Discussion in 'Business Operations' started by Precision Lawns, May 1, 2005.

  1. Precision Lawns

    Precision Lawns LawnSite Senior Member
    Posts: 283

    Not asking this for any time soon, as it will probably be at least another season or two before we look to hire anyone, but just wondering. Right now we're a general partnership and do all the work ourselves. I know as soon as we add employees, there's the obvious added cost of wages, workman's comp, and payroll taxes. What other expenses come with hiring the first employee(s)? I figure it's better to do the research now and not have any surprises in the future than the alternative.
     
  2. promower

    promower LawnSite Bronze Member
    Posts: 1,232

    I think you covered the big ones. Some indirect expenses could include, employee missuse of equipment, payroll services, uniforms, and unemployment tax.
     
  3. HOOLIE

    HOOLIE LawnSite Gold Member
    Posts: 3,981

    Don't forget the cost of your own personal pain & suffering dealing with employee "issues".
     
  4. DanaMac

    DanaMac LawnSite Fanatic
    Posts: 13,156

    Your gereral liability and business auto insurance may also go up.
     
  5. wrestlingcoach

    wrestlingcoach LawnSite Senior Member
    Posts: 251

    Workers' Comp About 8-10% Of The Wage Depends On What State

    Plus About Another 1% State Unemploy, 1 % Federal Unemploy, About Another 8 % For Matching Fica



    So A Good 15 -20 % Added To The Hourly Wage


    Now If You Give A Company Shirt To Them,
    \cost Of Something Breaking Because They Really Don't Know How To Do It


    But A Great Trusted Hardworking Employee == Priceless
     
  6. naturescaretaker

    naturescaretaker LawnSite Senior Member
    Posts: 851

    The general rule of thumb is what ever you pay the person double it for your total costs. Is you pay someone $10 per hour then your costs are going to be $20 per hour.
     
  7. mommacutz

    mommacutz LawnSite Member
    Posts: 120

    That is very good answer. It will be a good rule of thumb for me when we start evaluating whether we need employees or not.
     
  8. MMLawn

    MMLawn LawnSite Gold Member
    Posts: 3,569

    Actually Workers Comp may or may not be a cost for you as your state may not require it for just one employee. Example is that in NC you do not legally have to have Workers Comp until you employee 3 people (other then yourself). But also even if you are not "required" to have it you still need to consider it because this is a very accident proned business.
     
  9. Lnd Svyr

    Lnd Svyr LawnSite Member
    Posts: 33

    Be prepared for deadbeat dads and others whose wages you will have to dock for Uncle Sam. That'll take your time (and don't you love how the hard working folk have to clean up the messes made by the jerks). Use a billing rate factor of 3 times hourly wage, minimum of 2.7.
     
  10. Mueller Landscape Inc

    Mueller Landscape Inc LawnSite Senior Member
    Posts: 489

    How do you get to $20 from $10 per hour? What is included in your total costs? You are applying a 100% mark up for payroll costs.
     

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