When you hire employees, you incur multiple costs in addition to wages. It is critical to understand these costs and to keep in them in mind when calculating budgets or hiring new employees. Here is an overview of some of the main expenses.
Source Deductions and Vacations
As an employer, you must make Canada Pension Plan contributions and pay 1.4 times your employee’s Employment Insurance premiums. Additionally, you are obligated to offer holidays and vacation pay to your employees. Aside from these legally mandated expenses, there are several other expenses you may encounter or even choose to incur.
If you want to offer your employees insurance that goes above and beyond public health insurance, you may want to sign up for a Private Health Services Plan. The cost varies based on the plan you select and the potential benefits. However, you can claim the premiums you pay as a business expense, and your employees don’t have to report this benefit as taxable income. In addition, you may want to offer vision or dental insurance, short-term disability, or life insurance to your employees. You need to understand all of these costs as well as the tax implications before signing up for any plans.
Equipment and Space
When assessing costs, you also need to consider the tools your employees need to do their jobs. This may include uniforms, desks, office supplies, mobile phones, computers, and space to work. In most cases, you foot the bill for these items, and before hiring any employee, you should make a list of the expenses you expect to encounter. This should include the supplies your employee needs on day one as well as any additional items they are likely to need during their first year of service. Note in some cases with salaried or commission-based employees, you can require them to provide their own supplies.Additionally, you may be able to save on some of these costs by having your employees telecommute. It can save you money on renting office space, paying utilities, and related costs. However, if you require your employees to buy their own supplies or work from home, you need to make sure to meet your legal obligations as an employer. In particular, you have to fill out the right tax forms so your employees can claim the expenses on their tax return.
In addition to the above costs, you should also consider the cost of finding and hiring employees. This may include the time you spend searching and payroll hours for your HR department. If you pay a recruiting agency to find employees, you are going to face headhunting fees, and if you decide to hire a temporary worker from abroad, you may incur immigration costs as well, Also remember to consider training expenses, especially when estimating the cost of an employee’s first year of employment.