The Blog Of TL Wall Accounting

Should You Hire An Employee For Your Small Business?

Something that every sole entrepreneur learns at some point is that they need help with “something”. It could be with sales, answering the phones, handling marketing… almost anything.


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When you get to this point, it begs this question: do you hire or hire out? For some it’s an easy answer; for others it’s complicated. As an owner, you have to think about what’s at stake for your business.

Are you looking to grow? Are there aspects of the business that are too complicated to hire out, meaning you require someone you can train to do some of it for you? Are there things you do that are time consuming, whether or not you know how to do them? Let’s look at some of the things you need to think about before making a decision.

Taxes.

In all states, if you hire an employee, you’re going to have to pay federal taxes on their income. In some states, you’re going to have to pay things like unemployment and/or disability to the state; New York is an example of that.

The downside for you is that, at a minimum, you’re going to pay at least $7,000 in taxes matching what’s coming out of your employee’s pocket. Other taxes will depend on how much you pay for a salary. Most people don’t think about this but it’s probably the biggest issue an employer’s going to face.

Convenience.

Why are you considering hiring an employee? There are many services you can pass off to a service to do for you which doesn’t tie you to a permanent employee. If you’re looking for a little help, even if it costs you more money than a full time employee (which it probably won’t), you get to write those expenses off for your business.

What kind of services? Pretty much everything: accounting, bookkeeping, lawn services, cleaning, light paperwork, marketing… if you can think of it you can pay someone else to do it. The difference with this is that many times you’re still going to have to do a little bit of work so you have control over what’s representing your business.

Things like lawns and cleaning you can leave it to someone else without much worry. When it comes to marketing, you’re going to have to give some instruction, follow up, and make sure it’s representing you the way you want to be seen by potential clients. The same goes for financial services, where you’re going to want to know what’s going on, but in this case you should be doing it anyway.

Growth.

If you’re looking to grow your business long term, it’s going to take employees. For instance, if you own a pizza parlor, you’re going to need staff to handle a lot of the work processes. If you want to build a chain, it’s a no-brainer.

If you’re in an industry where what you do is specific, the only way you can truly grow your business is by training someone else to do at least some of the work. At that point you might also need someone to prospect clients, which means they need to be trained to understand the work you do.

This is different than convenience because you need to hire people who want to learn what it is you do. Hiring a virtual assistant to do your prospecting in a complicated business isn’t going to help you one bit if you have to intercede early in the process. They have other clients to deal with, and if they’re not dedicated to you specifically you’re not getting the bests out of them.

These are just a few things you need to consider if you’re thinking about hiring employees. Luckily there are options, depending on your needs. The most important thing is to think about it thoroughly before wasting time and money doing the wrong thing.
 

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