Frequently Asked Questions
How much does an employee actually cost?
The true cost of an employee is typically 1.25-1.4x their base salary. A $50,000 salary employee often costs $62,500-$70,000 when you include payroll taxes, benefits, equipment, and overhead.
What is the employer payroll tax rate?
In the US, employers pay 7.65% in FICA taxes (Social Security + Medicare) plus federal and state unemployment taxes. Total employer payroll taxes are typically 10-15% of salary.
What employee benefits should I budget for?
Common benefits include health insurance ($500-1,500/month), retirement matching (3-6% of salary), paid time off (2 weeks = ~4% of salary), and equipment/software ($1,000-5,000 one-time).
When should I hire my first employee?
Consider hiring when you have consistent revenue 3x the employee's total cost, more work than you can handle alone, and tasks that don't require your specific expertise.
How it works
- Enter the employee's base salary or hourly rate.
- Review the employer payroll taxes automatically applied.
- Toggle the benefits you plan to offer and adjust their costs.
- Factor in overhead like hardware, software, and office space to see the true cost multiplier.
Tips for best results
- •A standard employee multiplier is between 1.25x and 1.4x their base salary.
- •Don't forget the hidden costs of recruiting and training, which are amortized over time.
- •Use the contractor comparison to decide whether this role requires a full-time employee or a freelancer.