The Indirect Costs of having Employees - How much does your company spend on employment administration?
According to an updated 2010 study provided by the Small Business Administration (See Page 13), the regulatory burdens on small and medium sized business are:
|Type of Regulation||All Firms||<20 Employees||20-499 employees||500+ employees|
|All Federal Regulations||$8,086||$10,585||$7,454||$7,755|
|OSHA and Homeland Security||$610||$781||$650||$650|
This study commissioned by the US Small Business Administration shows the average cost per employee per year for a firm with fewer than 20 employees is $5,704. This cost includes the impact of all Federal regulatory paperwork and tax requirements placed on a company. PEO and employee leasing programs often cost less than one third this amount.
In addition this table does not include any costs for State regulatory burdens (like state unemployment taxes or state imposed workers’ compensation insurance costs). Furthermore, these latest study numbers were calculated in 2010 BEFORE the implementation of the PPACA - health insurance regulatory changes. Business owners can be sure these costs may be significantly higher in 2013 and beyond.
Joing a PEO can help reduce federal regulatory costs to your company. These costs are often significant amounts in addition to the amounts shown here. 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
Human Resources Administration Costs
Payroll Administration Costs
Benefits Administration Costs
Each of these cost categories above applies to each type of insurance your company wants to offer including: