LD Staff Writer
You’re a savvy business owner, right? You’re here reading, doing your homework and comparing the cost of a ten dollar-an-hour part-time employee, to a 30+ dollar-an-hour virtual assistant, it might seem that the employee is the obviously cheaper option.
Well… Read on, and learn why hiring a LongerDays virtual assistant might be the savviest business decision you’ll ever make!
Listed below are the “hidden” expenses you need to consider when hiring an employee, that you don’t have to worry about when hiring a virtual assistant from LongerDays:
Recruiting Expenses
Finding technically qualified people who can function effectively in a rapidly growing startup is no easy task. Be sure to devote the time to make sure that whoever you hire is as close to a “perfect 10” as possible. Anything less will be a drag on your business.
Basic Salary
Starting pay for entry level clerical work generally falls in the nine to thirteen dollar an hour range, depending on location.
Employment Taxes
Add these taxes on top of the basic salary:
- Social Security/FICA – currently 6.2% on the first $90,000 of salary – www.ssa.gov
- Unemployment/FUTA – 6.2% on $7,000 of salary – http://workforcesecurity.doleta.gov/unemploy/uitaxtopic.asp
- SUTA – Varies depending on your state – http://www.ehow.com/how_4812159_calculate-suta-taxes.html
- Medicare (1.45% with no salary cap – www.ssa.gov).
- Workmen’s compensation premiums are generally about .3% for clerical employees.
Benefits
Basic salary and employment taxes are a minimum. While it is difficult for a new/small business to provide much in the way of benefits these days, you can be sure that your new employee will desire them.
A good rule of thumb is to figure base employment expenses to be 1.25 to 1.5 times base salary.
Space
You need to provide some physical space to house the new employee. Work cubes are typically 8′ x 8′ in size. Furnishing the space, even with used work cubes, will probably run $2,000 at a minimum.
Other Equipment
The basics for office workers have to include a computer (and likely a telephone). Even with decreases in PC prices, figure on $1,000+ for a computer, $400 for basic software and $250 to $300 per year for a telephone.
Other Approaches
Instead of figuring out each cost component separately, you can develop some simple multipliers. These will vary depending on your business, but here are some general guidelines:
25% to cover employment taxes and benefits
25% to cover rent, equipment, etc.
25% for management/paid downtime
Using this simple method, you can expect a clerical employee to cost their base wage, plus 75%.
So What?
Even after adding all of this in, the actual cost of a ten dollar an hour employee is about $17.50 – still less than the cost of a $30+ an hour virtual assistant!
…But let’s not forget the additional benefits of hiring LongerDays:
Unlike a part time employee, a LongerDays virtual assistant comes with:
- An entire team of people – including graphic designers, writers, web developers, etc.
- A backup in case your normal VA is ever out of work
- A manager
- Full time availability, but you are only charged when your VA is working for you
Bear in mind that a new entrepreneur normally has little experience with hiring, meaning you will probably go through several bad hires (read: headaches) before you find the right person. Even then, it’s a rare case when you can hire exactly to meet your needs.
References:
“How much does an employee cost?” By Joe Hadzima, Senior Lecturer at the MIT school for management. Originally printed in the Boston Business Journal
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