How Much Does That Employee Cost? - Accounting Software Secrets
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How Much Does That Employee Cost?

How Much Does That Employee Cost?

How much does that employee cost?

With each business decision, there are direct costs to consider. There are also numerous indirect costs which are often overlooked. This is especially true as it relates to employees. To make personnel decisions that will provide the best result for the business it is important to include all the information.

Small businesses often do not understand all the issues related to employees. For a quick overview, consider the following:

1. Direct costs – these are the costs usually staring the business in the face on the Profit and Loss report. Expenditures that would be included in this category are gross wage/salary, employer payroll taxes, commissions, bonus, medical benefits, workers” compensation insurance, employer retirement contributions, etc.

2. Indirect costs – these may be known, but not as obvious such as: liability insurance, auto allowance, paid time off. Or, they may be overlooked completely like these examples: work equipment, training and supervision, recruiting costs, productivity and morale issues, administrative expenses to support the employee.

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