How much does it cost to hire an employee?
There’s more than just the price of your worker’s salary or wages to consider. EOR can be a solution for many companies to avoid this spending.
From how to find the right employee, to making sure you’re abiding by all applicable employment laws, and figuring out what paperwork you have to file for taxes, insurance, benefits, and more, are just some of the issues you must have in mind before hiring a new employer.
It’s important to remember that there’s more than just the price of your employee’s salary or wages to consider. There’s also the cost to recruit, train, and provide benefits that you need to take into account. For now, let’s focus on the bare minimum: your new employee’s wages or salary and the associated taxes that you have to pay as a small business owner.
One of the things that many employers ask is this: how much is it going to cost?
There is no one answer to this question, but here are some things you can keep in mind as you try to anticipate the cost of hiring your first employee.
1. Advertising the Position
When you’re ready to advertise the position, you have some options. In order to get the description of your job in front of the right candidates, you’ll probably need to pay some money.
For example, popular job posting sites like Monster or CareerBuilder charge between $300 and $500 for job listings that last between 30 and 60 days. Some lesser known sites charge a smaller fee, whereas others charge per click. You can also post an ad for free in a handful of places, but this is generally considered a “you get what you pay for” situation. Another option is to work with a recruiter who will be paid a fee when the position is filled.
2. Anticipating Tax Responsibilities
When it comes to taxes related to employment, there are some things that are the responsibility of the employer, and some that are the responsibility of the employee. A few things are shared.
Each country has got its own laws and taxes.
Next we are going to take a look at the New York market.
The main taxes employers have to pay in New York.
Here’s a quick look at how the payroll tax rates for New York employers break down as of February 2019. These numbers change, so always check with a tax professional to get the most up-to-date amounts.
- Social Security: Social Security is a federal insurance program that provides benefits to retired employees and the disabled. Employers must pay 6.2 percent of taxable wages on the first $132,900.
- Medicare: Medicare is a federal system of health insurance for people over 65 and younger people with disabilities. Employers must pay 1.45 percent on all taxable wages.
- Federal Unemployment: The Department of Labor oversees state programs that provide unemployment benefits to workers who become unemployed and meet eligibility requirements. FUTA is 6 percent on the first $7,000 of an employee’s wages. However, most New York employers are expected to pay 0.6 percent in 2019 because they most likely pay state unemployment too, earning a 5.4 percent credit against their FUTA.
- New York State Unemployment Insurance: A state-sponsored insurance program, New York provides benefits to unemployed workers, the disabled, and those on paid family leave. New York SUTA is 0.825-8.225 percent on the first $11,400 of an employee’s wages. This rate is given to you by the state and can be influenced by how long you’ve been in business, the number of employees you have, the amount of unemployment benefits that have been charged to your account, as well as other factors. Because it varies for each business, we’ve used the standard rate assigned to new employers in our calculations above.
- New York Reemployment: This is 0.075 percent on the first $11,400 of an employee’s wages.
- New York Metropolitan Commuter Transportation Mobility Tax (MCTMT): This tax applies to employers that conduct business in New York, Bronx, Kings, Queens, Richmond, Rockland, Nassau, Suffolk, Orange, Dutchess, and Westchester counties—and whose payroll expenses are over $312,500 per calendar quarter. The tax rates are 0.11 percent, 0.23 percent, and 0.34 percent, depending on the amount of payroll expenses paid each quarter.
- New York Disability Benefits: Disability benefits need to be purchased by employer when they’ve met the criteria. A payroll deduction of up to 60 cents per week may be deducted from an employee’s paycheck to help pay for this insurance.
As you have seen, hiring someone costs a lot of money. But the good news is that you can make your company bigger without facing all this costs. How? Hiring an EOR
An Employer of Record is a company or organization that is legally responsible for paying employees, including dealing with employee taxes, benefits, insurance, visa application, and sponsorship applications and a great many other transactions and operations concerning human resources.
Would you like to hire employers without having to pay for all the taxes?
Contact us and start saving money.