In today's presentation we begin a new series on how to hire and manage employees with a look at the hidden costs of hiring employees.

1. The hidden expenses of hiring employees
by FitSmallBusiness.com

2. “Hidden” Expenses Are Generally
10% Or More Of Wages

3. You will also need to pay:
•Social Security
•Medic Care
•Unemployment Insurance
These will add up around 10% of
their wages, and could even be
higher.

4. If you hire more than 50 full-
time employees you will
need to provide them health
coverage, which can add
thousands of dollars per
employee per year.

5. Table Of “Hidden Cost” Of Hiring Employees

6. Expence
Cost in Dollars or
Percentage of Wages
Maximum Dollar
Amount Taxed Per
Employee
Percentage of Salary
for a Worker Earning
$28,00 per Year
posters Free/ $63 Per Year ----------------- ------------------
Social Security Tax 6.2% $113,700 ( in 2013 ) 6.2%
Medicare tax 1.45% Unlimited 1.45%
State Unemployment
Insurance
CA 3.4%
NY 3.4%
TX 2.7%
$7,000
$8,500
$9,000
0.85%
1.03%
0.88%
Federal unemployment
Insurance
Most States 0.6%
CA, NY 1.5%
$7,000
$7,000
worker compensation
Insurance
Typically 1% to 2% for
office workers
-----------------
Typically 1% to 2% for
office workers

7. What are posters?
In many lunch rooms or employee only areas, you will see posters
detailing employee rights like the minimum wage. They are a
requirement by both federal and state government.
The Federal Government posters are available here for free.
The Labor Law Center will provide you a poster for around $63 per year.

8. Social Security & Medicare Tax
(also know as FICA)

9. In addition to employees paying
these taxes, employers must pay
as well.

10. • Employers must contribute 6.2%
of salary / Wages for social
security on the first $113,700 paid
to an employee (for 2013).
• Employers must contribute 1.45%
of salary / wages for medical care
without limit to de employees
salary /wages (for 2013)

11. What about the extra medicare
0.9% tax for “Obama Care”?
“There is no employer match on the
0.9%”, says Chris Hesse, a tax
partner with CliftonLarsonAllen in
this article.

12. When do you pay FICA taxes?
Depends on the size of your payroll.
You need to calculate and make
FICA payments to the IRS once per
month, or semi-weekly.
For more check Jean Murray of
About.com article.

13. Unemployment Insurance

14. When states use up funds that are set-aside for
unemployment benefits, the federal government steps in
and loans the state money.
This is one of the reasons that employers pay
unemployment insurance taxes to both federal and state
governments. The unemployment taxes on a federal level
are 100% paid for by the employer

15. While the official federal
unemployment tax (FUTA) rate is
0.6%, the reality is the tax is a
small fraction of this amount for
the following reasons:

16. • If your company is up to date
on your state unemployment
taxes, your company receives a
credit, reducing the rate to 0.6%

17. •The tax applies only to the first
$7,000 of income per employee. If
your company is paying 0.6% and
every employee makes at least
$7,000 per year, the tax only
comes to $42 per year per
employee.
(For more about this topic click here)

18. The rates mentioned at the beginning of the presentation are
the introductory rates to new employers. Once your company
has a history of hiring, the rate will be adjusted.
The majority of unemployment taxes
get paid to the states.

19. The tax paid to the state is not limited to the first $7,000. The
taxable income amount for most states is $14,000 or less. For more
info go here.
You will be paying separate payments for FUTA and Unemployment
tax, for the state and federal governments.
The majority of the unemployment taxes
get paid to the states.

20. Workers Compensation Insurance

21. Covers claims by employees
against a company for job related
injuries or illness. Is required in
all states except Texas.
In most states is sold and
underwritten by private
companies.

22. How much does it cost?
Is priced as a percentage of
payroll. The average is 2%. How
ever, depending on the state and
type of work, the percentage can
be lower or much higher.

23. In California
A clerical worker might have a
rate of 1.25%. You may pay $375
per year.
A roof installer / repairman
might have a rate of 10%. You
may pay $4,000 per year.

24. The insurance company will have
the base rates for each employee
classification.
For more information on how
rates are set read this article by
Robert Elliot, J.D.

25. 1) You will need to pay FICA taxes. Unless you have
employees making over $100k per year. For small companies
this task needs to be paid monthly.
Summary

26. 2) You will need to pay federal and state unemployment tax. At
most, the federal option will be $105 per employee. For the state
unemployment insurance you will need to apply for it and your rate
will be told by the state, which might add around 1% to your
employee expenses. This tax is paid quarterly.
Summary

27. 3) You will need to get workers compensation insurance via
private insurance company in most states. The rates by
profession are set by the state. For office workers, this
expense should be less than 2%.
Summary

28. And Finally...

29. To learn how to be a more successful
entrepreneur visit us at....

30. www.FitsmallBusiness.com
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31. www.FitsmallBusiness.com
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32. www.FitsmallBusiness.com
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