Many startup business owners plan to hire in the new year. Doing so may help the company grow, improve profits, or enhance customer service. Yet, as you plan to hire, there’s much to think about before making any decisions. You need to know what top talent expects from companies like yours and how your business can be the ideal employer for those individuals, especially in a tight labor market.
Another factor not to overlook is the tax implications and financial aspects of hiring. As you hire new members to your team, you need to consider how it will impact your accounting goals. Here’s some insight.
Hiring a New Employee Costs More Than Just a Salary
The salary you pay for your new employee is one of the biggest considerations during the hiring process. Yet, it’s not the only cost of bringing in a team member. Before you put a value on it, consider the additional costs:
- Recruiting costs (how you plan to find new talent along with the process of interviewing and vetting them)
- Training costs (including the time it takes to use one of your current top employees to teach the new person)
- Benefits offered (consider what type of benefits are valuable to today’s top talent and the costs for providing each, including healthcare, time off, fitness clubs, maternity/paternity leave, and much more)
There’s also the loss of productivity to consider. A new employee needs time to be integrated into the company, and during that period, they are not going to be reaching peak productivity for your company. That’s going to cost you money. One study indicates it takes up to 12 weeks for a new hire to reach full productivity – that’s 3 months you’ll be paying someone who isn’t reaching their top production.
Workers Want to be Remote
When the pandemic struck, and suddenly employers had to make a way for employees to work from home, they worried about how it would happen. How could they keep track of employees who were not under the close supervision of management? What the 2020 stay-at-home order did was prove most jobs can be done from home.
Considering this, think about shifting your onboarding process to move it to a virtual one. If your organization has the capability of operating virtually, lean into it. Doing so helps you attract the employees you need while also reducing your costs.
To make this a success, you’ll need to ensure your company has proper systems and processes in place to manage the business remotely.
Consider doing the same for your finances as well. You and other employees with your financial information will benefit from having the ability to access accounts and investments from a distance. The right technology streamlines this process.
Demand for Top Talent Is High
There is a lot of top talent out there. However, potential employees have shifted their mindset. They are not always looking for just the highest salary. They need more information and benefits to make the decision to leave one company for another.
What are they looking for?
- Benefits that include healthcare and additional services employers provide, including profit sharing, retirement planning, and flexible time off
- Personal time is a big part of the benefits employees want. That includes days off that don’t require carrying a phone with them.
- Vacations and other types of self-help benefits are also sought after. Employees want companies to offer them the resources they need to live a happy life.
- Flexibility is also important. Being able to work from home, for example, is one of those flexibilities.
- A positive work culture is also a priority for many people. For example, employees want to be surrounded by a positive environment with motivating supervisors. They also want to know the company is there to support them.
Your business needs to be able to offer these things to attract top talent. This may mean adjusting your budget and finding areas where you can save money so you can offer more to your employees through their benefits.
First Time Hiring?
If this is the first time you’ve done any significant hiring, you’ll need to get organized, especially when it comes to setting up payroll. Each employee needs to be properly set up moving forward, though the process gets easier over time.
Be sure to make the distinction between whether your new hires are employees or independent contractors, as this impacts your taxes and may help you save money depending on the method you select. You may pay less out of pocket for an independent contractor because you do not collect taxes for them, but you also lose much of the control over managing these individuals, including when and how they work.
It’s a good idea to look over the data and talk to your accountant about these goals before making any decisions.
Work with an Experienced Accountant
An accountant can recommend if now is a good time to hire a new employee based on your company’s financial health and help you determine the total cost of doing so. They can also recommend the tools and systems to help you to set up a virtual solution. They can help you set up payroll and determine the best decision moving forward based on taxes.
To learn more, call Pasquesi Partners. We’re here to help you make the best decisions for your company.