Startups, Don’t Get Caught Off Guard With These New Employee Expenses

August 21, 2015

Startups Hire Right

Your company is growing. More clients are using your services and are happy with your product. Now it is time to expand and hire new employees.

But wait just a minute. How many new employees can you actually afford? There are a number of costs to finding and employing a new worker besides simply paying their salary. Wisdom dictates that you count the cost before hiring more people than you can financially handle. Do not negate your growth by over-hiring.

Below is a list of expenses for new employees that must be considered before making a hire:


Long story short, recruiting takes time & money to do right. You need to get the word out there, then you need to spend the time sifting through applicants. We’ve made this process a heck of a lot easier, and faster for you with our 24/7 Online Job Marketplace. Post your job with us, and see the benefits almost immediately.

Background Check/Drug Testing.

Some people may want to skip this process. After all, interviews were conducted and everything seemed alright with the potential hire. Regardless of gut feelings and first impressions, take this necessary step to protect your company. A background check that comes up with some incidents does not mean you are unable to hire the individual, but it lets you know more about whom you are hiring.

In some instances, it may be wise to pass on an individual due to certain past mistakes. In others, it may be permissible to hire them. A background check and drug testing simply allow you to make more informed decisions about who is working for your company and with your other employees. They will appreciate your care and discretion in this manner as well.


Once you hire someone, they must be trained in what to do This can look a number of different ways. Perhaps there are online modules that the new hire can complete. Maybe they have to travel to a class in another city that allows them to familiarize themselves with the necessary knowledge and skills for the job. It could be that on the job training is the best solution for new employees. In this case, you are paying one employee to teach and another to learn.

In some cases, this decreases productivity for the duration of the training. It is important to determine how much you are willing to invest in the training of your employees, whether it be through a class or on-site. Consider it carefully for a well trained employee is a productive employee.


It is obvious to consider salary as an expense for a new hire. Benefits are pretty obvious as well. You must determine what types of benefits are necessary for your employees. Health care plans, retirement plans, life insurance, and disability coverage are all areas that need to be considered. Do the best you can to take care of your employees. This will encourage them to take good care of you and your company.


Are there free drinks in the lounge? Is there a lounge? What kind of team-building events are there? Are there other perks? Gym memberships? Work picnics? Determine the cost of these perks and divide it by the number of employees you have. This will determine the cost per capita when it comes to the perks of the business.

The Tax Man.

Payroll taxes include Social Security, Medicare, and federal and state unemployment taxes. These must be included in your calculations in bringing on a new employee.


When you hire a person, you have to give them a place to work and something to work with. So, it is important to figure out the equipment and supplies necessary so that the employee can best do their job. From big equipment like computers and desks to small supplies like paper clips and pens, consider the cost necessary to outfit your new employees with what is necessary to excel at their job.

Though this may be disappointing as it brings to light the extra costs encountered when hiring a new employee, it is better to know about these now rather than be surprised by them later. Being informed is the best way to assess how many people you can hire and take good care of as they work for you.

We believe in transparency, and the success of your company is just as important to us as it is to you. So we’ll always be straightforward. With our talent. And with our insights on how you can grow your business.

If you’re ready to hire, explore our 24/7 Online Job Marketplace for talent that will fit right at home with you and your company.

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VP of Marketing at Digital Astronauts

Ronny Cheng is one of the Co-Founder’s of Digital Astronauts and has helped drive lead generation in the software industry for organizations of all sizes — from start-ups to Fortune 500’s. He helped build one of the first online software review websites, specializing in CRM, ERP, and HR software. He’s a nationally published author with extensive experience working with the HR/Recruiting industries largest brands. In his spare time, you can catch him on Instagram doing his best food blogger impersonation.


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