When it comes to hiring employees, there are a lot of expenses that you most likely must pay for. Some of these expenses are obvious such as an hourly or salary wage. Other expenses though you might not think about until you have actually begun the hiring process of your first employee.
If you are about ready to hire your first employee, here are five expenses that you will need to worry about.
When it comes to hiring your first employee, you will need to worry about providing dental insurance. You will need to make sure you provide your employees with dental insurance for cheap because the cost is not that much to your company.
Providing dental insurance also makes your company look good to the employees who might not have had such coverage in the past. Dental insurance is not required, but it is an expense worth taking on.
You want to get some sort of disability coverage for your employee. There is short-term disability which covers employees from 12 weeks to 1 year. Long-term disability on the other hand is for anything that is over one year.
The long-term coverage also has a longer waiting period before benefits are paid out, whereas short-term often pays out in 14 days. If you want to decrease the premiums you will pay on the disability coverage, you can choose to have a longer waiting period in between the claim and payment.
Workers’ Compensation Insurance
Before you hire your first employee you will also need to purchase workers’ compensation insurance. You are legally required to have workers’ compensation insurance on all of your employees, even if you are just starting out.
When it comes to workers’ compensation insurance you can either choose a commercial insurance company or go through your state. States have an insurance program just for workers’ compensation and this is a good option if you are just starting out with your first employee.
Social Security Taxes
You also should know that hiring your first employee will mean you have to pay social security taxes. You will need to pay the same rate of social security taxes that your employee ends up paying as part of the requirements by the Internal Revenue Service.
If you are not very knowledgeable when it comes to the Internal Revenue Service and taxes then you will need to seek out a professional tax consultant. This is also an added expense before you bring your first employee on board.
Various Leave Benefits
Another expense to keep in mind is leave benefits, which can be sick days or paid vacation time. Before you hire your first employee you need to figure out how many personal days, sick days, vacation days, and mourning days your employee will have and calculate this into your expenses.
While leave benefits are not a law federally, most employers have some sort of leave benefits that are rolled into the benefits and pay package. You can make this as few or many days as you want since there are no requirements on this being mandated by law.
As you can see, there are many expenses you will need to think about when you hire your first employee. The fact of the matter is that your first employee is always going to be the most expensive for your business. As you hire more employees the costs and expenses that you will need to worry about do come down quite significantly.