Health Insurance

Almost everyone has been an employee at some time in their lives. Whether you worked for your Uncle Harry at his farmer’s market selling fruit and vegetables for cash, or held a high-end internship during a summer semester in college.

Now that you are the employer and not the employee, you have a much better understanding of your previous employers’ requirements and desires in their employees. Good work ethic. Check. Completes tasks in a timely manner. Check. Shows up to work on time. Check. Doesn’t waste company time or money. Check. Requests paid time off for holidays, sick, and vacation. Che—wait a minute. Asks for medical insurance, including dental and vision. Now, hold on a second. Requires unemployment, Social Security and Medicare. HEY!

The cost of an employee can become prohibitive compared to their value to your company, depending on the type of work the employee can perform. Hidden costs for employees are driving the price up for every business owner, small and large alike.

According to Joseph Hadzima, Jr. from MIT Sloan School of Management, the cost of an employee could be as much as 2.7 times the actual salary or hourly rate of an employee. So in essence, you could be paying over two and a half people the base salary it takes to finance one full time employee.

Hidden costs associated with employees could include such things as:

· Social Security/FICA

· Unemployment/FUTA

· Medicare

· Workers Compensation

Oh, and don’t forget about benefits. If you have a full time employee, chances are they are expecting some sort of benefit package, including full medical coverage for themselves and their family, dental, vision, retirement, paid vacation, paid sick time, and on and on. Each of these are not cheap, and adding them up will make you look twice at the bottom line. Seriously, is this person really worth the amount of money you are investing into your business? I hope so.

Another thing: On top of all the other expenses incurred by hiring an employee, one of the most important things to remember is location, location, location. Where are you going to put them? They might be expecting a desk with a computer, but if you can find the perfect employee that loves to sit on the floor and draw up your documents with crayons, you’ve hit the jackpot. The amount of office space needed for each employee is significant. Assume you lease your office for $1,500 per month, and it has space to fit three employees plus yourself. Three quarters of your space is for your employees. So you are paying $1125 a month, just to give them a place to sit. Ouch.

Equipment can be a hassle as well. Computers with all the bells and whistles (hello, Microsoft Office package, anyone?) can be over $1000, and that’s being conservative. Include in your equipment costs phone lines; consumable office materials like paper, pens, pencils, and the all-important Post-It notes; desks; chairs; filing cabinets; etc.

But before you pull out all of your hair, think about the alternatives. With technology growing as fast as it is, businesses are video conferencing with companies overseas, and telecommuting is growing in direct proportion to the increase in technology (and the increase in gas prices). One alternative is a virtual assistant.

The virtual assistant industry is exploding. With the benefits of contracting with a virtual assistant, you are able to cut out the employment taxes (ALL of them), the space and equipment (they use their own) and the hassle and headache of finding something for them to do to fill up all 40 hours in one week.

Virtual assistants can work the hours you need, when you need them. They each have their own specialties, including proofreading/editing, blog design, web design, bookkeeping, database maintenance and more. Depending on your need as a business owner, there is a virtual assistant out there that can provide you with the necessary skills and tools to assist you in your business. CEOs of major corporations could benefit from the virtual assistant industry. Why not you?

Shauna Reed is the owner of Keystone Promise Virtual Assistance. She has helped others make their documents and other written materials professional and inviting. You can reach her at shauna@keystonepromise.com