According to a study commissioned by the US Small Business Administration in 1995, the average cost per employee per year for a firm with fewer than 500 employees is $5,000.  This cost includes the impact of all Federal regulatory paperwork and tax requirements placed on a company.  While these costs may be "hidden", in terms of the time your staff spends managing paperwork, make no mistake, they are real. Let's look at the major cost components:

Labor Accounting and Reporting Costs

• Building and running labor costs reports including departmental or job costing labor reports.
  
• Journal Entries for labor costs, tax withholding, etc.
  
• Federal, State and Local Tax Filings
• Regulatory Agency Reporting and Filings

Benefits Administration Costs

• Plan Acquisition Costs
  
• Plan Enrollment Reporting and Administration
  
• Plan Premium Remittance to Insurance Carriers
  
• Employee Plan Enrollment and Termination Reconciliation with insurance carriers
  
• Annual Plan Enrollment, ERISA and HIPPA Compliance
  
• Claims Management
  

• Medical Plans
  
• Dental Plans
  
• Long Term Disability
  
• Short Term Disability
  
• Accidental Death & Dismemberment
  
• Life Insurance
  
• Vision Plan 
  
• 401(k)
  
• IRA
  
• Employee Assistance Programs
  
• Flexible Spending Accounts
  

Compliance Costs
What would your company pay to transfer the risk for non-compliance fines and penalties for HR related employer responsibilities? Until your company has had a fine levied by a government agency, this may not seem to be worthwhile. A single fine can mean significant costs.