New employees can generate growth and revenue for trade businesses. However, failure to properly calculate the true cost of an employee before hiring can cause serious financial pressure down the line. To figure out the true cost of hiring a new employee, businesses must factor in their wages, as well as payroll taxes, benefits, training, and equipment costs.
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The largest (and most obvious) cost to hiring an employee is their salary. While this will vary depending on industry, experience, and location, at the very least, you’ll need to meet local minimum wage laws.
However, simply meeting these requirements may not guarantee the best talent. When calculating a new employee's base salary, a good starting point is to consider how much value they will bring to your business.
Are you charging enough per hour? Use our free calculator to find the right charge-out rate.
The last thing you'd want to forget is to factor in the taxman. As responsible employers, you are responsible for payroll taxes, pension contributions, and other mandatory payments.
These vary by country, but include:
Securing the best talent often involves going above and beyond. Providing competitive benefits helps attract and retain skilled workers, but adds to hiring costs. However, it's important to note that even if a benefit you offer is considered optional, it might still have to comply with certain laws if you offer it within their contract.
Depending on your industry, part of your investment into a new employee will include ensuring they comply with industry regulations. For some industies, Some training is mandatory, depending on trade licensing requirements.
Common training costs:
For businesses hiring apprentices, read How to Hire an Apprentice and Incentives for Employers to Hire Apprentices.
Many trade businesses supply tools, protective equipment, and uniforms for their employees.
Every business is different, and hiring costs depend on your location, industry, and the type of worker you employ. Use the Employee Cost Calculator to get a tailored estimate for your business.
For further guidance on hiring and managing staff, check out these resources:
Hiring is a big investment, but with proper planning, it can set your business up for long-term success.
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