With all of the national discussion of raising the minimum wage, many people think that the total cost of hiring a new employee is limited to their hourly rates. However, on average bringing on a new team member will cost an estimated 25-50% above their salary or wage rate. Your optometry practice will need to account for paid time off, health benefits, and even payroll taxes. Your optometry accounting firm can help you keep track of these extra costs so you can keep a close eye on the bottom line for your practice.

Paid time off

In addition to the hourly wages of your new employees, you will need to account for the days when they are unable to be there because they’re sick, or if they are taking a vacation. You will still be paying them their hourly wages, but you won’t have the benefit of their presence at your practice. You may need to bring on another team member to ensure your business still runs smoothly, or you and your staff may have to work double-time to make up for the absence.

Most practices offer paid time off to attract motivated employees. To keep up with your competitors, you need to factor these costs into your budget.

Health benefits

Offering a comprehensive health benefits package is also key to remaining a competitive employer. You will need to consider how much of the employee’s premiums you are willing to pay. If you choose to pay 60-100% of the premium costs, expect that to become a hefty monthly bill in your budget. Under the Affordable Care Act passed in 2015, if you have more than 50 employees, you are considered a large company and must provide health benefits to your employees. Smaller businesses with 25 or fewer employees may qualify for a 50% tax credit for their insurance payments to employees.

Payroll taxes and retirement benefits

In general, expect to pay about 15% more than your employee’s wages when you factor in payroll taxes. These include items such as Medicare, federal taxes, state taxes, Social Security, unemployment, and other requirements.

If you also include retirement benefits, expect to factor in those costs into your employees’ weekly paychecks. Most employers will match their employees’ contributions to retirement programs such as 401(k)s and pension plans. This cost is typically between 1-6% in each paycheck.

To keep track of these various items and what it will cost you as an employer, your optometry bookkeeping firm can help you stay on top of how much money you are paying versus how much money you are bringing in to your practice. If you choose an optometry accounting outsourcing firm like Caro & Associates, we can help you analyze your budget and provide guidance on employee costs.

Contact us

At Caro & Associates, we are dedicated to helping your optometry practice and employees succeed. Let us help you with your bookkeeping need. Call us at (206)-497-0671, and we’ll help you get started.