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Paying Your First Employee

Getting your business ready to hire, figuring out how much this employee is actually going to cost you, and a comprehensive breakdown of everything employers should do or consider when it comes to paying their first employee.

Getting Your Business Ready to Hire

So you want to hire a new employee. Great! There’s a lot that goes into hiring - especially for your first employee. This resource is going to walk you through all the steps you need to take, beginning with the most critical tasks, like making sure your business is properly set up to legally and effectively hire and pay an employee. Following this advice will ensure that you are prepared to start the hiring process and grow your business in exciting ways.

 

Consult a CPA

It never hurts to consult with your CPA to ensure your business is structured properly and you can afford to hire an employee. CPAs can answer a lot of questions in these scenarios, especially in unique situations that aren’t covered in this resource. 

 

Get an Employer Identification Number (EIN)

This can be done online through the IRS site, but eligibility for an EIN is dependent on a few factors.

  1. Your company must be based in the United States or US Territories.
  2. The person applying has to have a valid Taxpayer Identification Number.
  3. The responsible party can only apply for one EIN per day.

Click here to download the SS4 Form, which is used to apply for an EIN.

 

Acquire a State Withholding EIN (if applicable - not always same as FEIN)

First, you must register your business with the secretary of state's office for your state. Many states have pages targeted to small businesses, with links to the registration forms.

You must obtain a federal tax ID number, also known as an employer identification number, if your business has employees. You can apply online at the Internal Revenue Service website.

You must also register your business with your state's revenue department or other tax authority. In many states, you can do this on the agency's website. You can find the page for New York State here

 

Get State Unemployment Insurance (SUI)

State Unemployment Insurance (SUI) is a federally mandated program that requires employers to fund unemployment insurance in every state where they have employees. You will need to apply for this on a state-by-state basis if you have employees in multiple locations. In New York State, for example, you will apply through the Department of Labor website. In order to apply, you will need your EIN.

You can apply for State Unemployment Insurance in New York State here.

 

What’s the Timeline?

Each step of the hiring process takes time, and there can be inconsistencies in the process depending on the specifics of your needs, industry, and location. Here are some general time frames to keep in mind:

Interview

The average time it takes to advertise, interview for, and fill an open position, according to LinkedIn’s 2017 Global Recruiting Trends research, is between a few days to four months. The fastest industries that take only a few days include construction, retail, hospitality, and warehouse services. The industries with the longest process include health services, financial services, and government positions.

EIN

Your EIN is available immediately if you apply online. If you apply via fax, you will get a faxed reply within a week, although omitting a return fax number delays the process and you will instead be mailed your EIN within two weeks. Applying by mail is the slowest way to request an EIN, as it takes up to four weeks to be processed via mail.

Onboarding

Onboarding, which is the process of officially hiring and training the job candidate you’ve extended an offer to, can take anywhere from a few hours to several weeks. This is dependent on a number of factors, including your specific training processes, the employee’s experience level, and the complexity of the position.

All in all, the hiring process can take anywhere from a few days to several months, so we always advise anticipating that it will take more time than you expect. This is especially true for employers who are going through the process for the first time and on their own. 

How Much Does Hiring an Employee Actually Cost?

This is one of the first questions new employers have when they’re getting ready to hire their first employee. Aside from the actual wages, they want to know how much it’s going to ultimately cost them to bring on a new employee.

 

Taxes

What are business taxes and how much can you expect to pay?  

Business taxes are also called employment taxes, and they refer to many different taxes that are connected to employing workers. FICA covers Social Security and Medicare and is based on a percentage of your employee’s salary.

Business taxes also include income tax that is withheld from the employee’s salary and paid to the federal and state government. Additional business taxes include Federal Unemployment Taxes (FUTA), Medicare taxes, and worker’s compensation taxes. These all fall under this “employment tax” umbrella, as well. Everything in this category is paid by the employer to the appropriate federal and state agencies, although the funds come from different sources, including the employer’s pocket, withholding from the employee’s pay, or some combination of the two.

What about payroll taxes?

Payroll taxes are a lesser category than general employment taxes. In fact, payroll taxes generally fit as a subcategory of employment taxes, because this refers to the Social Security and Medicare taxes that are withheld by the employer from the worker’s paycheck and then matched by the employer.

In the video below, our Tax Manager Ashley Hamilton explains how payroll taxes are calculated.

AshleyExplains_E101_How-Do-You-Calculate-Payroll-Taxes-FINAL_v2

 

According to The Balance Small Business, you must:

  • Withhold federal income taxes from employee pay.

  • Withhold FICA taxes from employee pay and pay those taxes plus an equal amount from your business.

  • Withhold state income taxes from employee pay.

  • Withhold the additional Medicare tax of .9 percent of an employee's earnings over certain thresholds. As of 2018, these thresholds are $200,000 for single employees and $250,000 for married taxpayers who file joint returns with their spouses.

  • Pay federal and state unemployment taxes, based on the number of employees you have. You must pay FUTA. Your employees do not contribute to this tax.

  • Pay worker’s compensation fees to state or federal agencies.

  • File Form 941 quarterly.

Worker’s Compensation Policy

Having a robust worker’s compensation policy can protect you from many work-related lawsuits, including those related to injuries and illnesses sustained as a result of an individual’s employment. The law requires you to carry this kind of coverage to protect both you and your employees. The trade-off is simple: employees are covered no matter who is at fault for the illness or injury, and employers are protected from most lawsuits.

Worker’s compensation cost varies from state to state. In 2017, the Bureau of Labor Statistics reported that in 2015, the average cost of worker’s compensation  per $100 in employee salary was $1.36.

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Disability Policy

You will need to decide what disability policies to offer to your employees. More employers offer short-term disability than long term, although recent trends show that 33% of employers provided long-term disability coverage in 2014, and 39% provided short-term.

Employees don’t generally contribute to short or long term disability coverage, as these costs are covered by you, the employer. The BLS states that, “the cost of access for short-term disability and long-term disability across all private industry workers is $0.30 per hour worked.”

New York State Employers

New York is one of a handful of states that require employers to provide disability benefits coverage to employees for an injury or illness that occurs off the job. 

This insurance provides temporary cash benefits to an eligible wage earner when they become disabled by an illness or injury that occurs off the clock, or becomes "disabled" from pregnancy.  

You can learn more about the NYS disability statute here.

Paid Family Leave

States that have a Paid Family Leave (PFL) law will end up spending some resources to fund their employees’ PFL. New York is one of these states. PFL is funded through employee contributions via their pay, and New York State employers can use this convenient Weekly Deduction Calculator to determine the cost.  

Guide to NYS Paid Family Leave

Our comprehensive PDF Guide explains the Paid Family Leave program that took effect in New York State in 2018 and how employers can stay compliant.

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NYS Paid Family Leave Compliance Bundle

Ready to use letter and policy templates you need to provide the proper written guidance to your employees to comply with NYS Paid Family Leave.

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Requirements & Best Practices

When you first begin to onboard employees to your company, you must already be compliant with several additional labor law requirements. Instead of limiting yourself to only what is legally mandated, you will also want to research and understand the best practices for your industry when it comes to hiring, training, and informing your workers.

Labor Law Posters

Did you know that you are required by law to display posters that communicate important labor laws to your employees? The Department of Labor provides information about each of the possible posters you could include, as well as the potential penalties for not including the required ones. For example, you may choose to display the Fair Labor Standards Act poster, but there is no penalty for not displaying it. However, certain OSHA posters are required for all commercial employers and there are citations and penalties for neglecting to display them. Use this poster updates resource to determine what you are required to display in your workplace. 

Learn more about our automated poster compliance service

 

Employee Handbook

You have a few options for creating your employee handbook: write a new one from scratch, use a pre-existing handbook template (paid or free), or hire a professional to write it for you. Your handbook serves multiple purposes. In addition to informing your employees of the policies of the workplace, it also protects you from litigation.

Your handbook should cover the following:

  • Anything that your state law says you must include

  • Company history

  • Family Medical Leave policies

  • Paid time off policies

  • Equal employment and non-discrimination policies

  • Worker’s compensation policies

  • Employee behavior expectations and policies, as well as disciplinary procedures

  • Information on pay and promotions

  • Benefits information

  • A statement that says that handbook policies are subject to change

  • Employee acknowledgment page

We recommend having a legal professional review your handbook before it is distributed to any employees.

Employee handbook service

 

Critical HR Functions

Small businesses that are hiring their first employees typically don’t have a dedicated Human Resources department, which means that someone is serving in an HR role who may not have a specific HR degree or work experience. This person will need to be familiar with critical HR functions. In 2017, the Houston Chronicle published a useful list of the six key functions of an HR department. They are:

  • Ensure compliance with labor laws

  • Recruitment and training

  • Record keeping

  • Payroll and benefits

  • Employee relations

  • Employee performance improvement plans

Request an HR software demo

 

Employee Termination

Unfortunately, not all employees work out. If you are first starting your business, or if you have not hired someone before, you may be overly optimistic about the long-term presence of the employees you are going to hire. Even if you are an optimistic, look-on-the-bright-side person, you still need to have a plan for what happens should you need to terminate someone’s employment.

If you find yourself in the unfortunate position of having to terminate an employee, check out our NYS Employee Termination Kit by clicking here or the button below. The kit includes a how-to guide to employee terminations and a bundle of all the forms and letter templates you may need during the process.

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Employee Status & Compensation

How much will your employees be paid? Are you going to hire salaried workers, hourly workers, or a combination of both? How will you determine how often you will pay your workers and how they will be classified for employment and taxation purposes? Because it is recommended that this is all determined before you offer the job to the candidate you want to hire, we have compiled a list of the most important things you need to know about employee status and compensation.

Worker Classification (Employees vs. Independent Contractors)

When you hire an employee, you are responsible for withholding taxes from their pay, abiding by all applicable labor and employment laws, and issuing their pay on a consistent basis, whether that is weekly, bi-weekly, or monthly. It is also the employer’s responsibility to provide an annual W-2 tax form to the employee.

Watch our Tax Manager, Ashley Hamilton, explain how to properly classify employees and independent contractors.

AE102_Contractors-VS-Employees_FINAL-01

 

Independent contractors are not covered by most employment and labor laws. The keyword “contractor” is important here because you must have a signed contract that defines the scope and details of the work, as well as the legal responsibilities of both parties. You do not withhold taxes from the pay of an independent contractor, because they are responsible for maintaining their own records and paying their taxes accordingly.

You do, however, provide them with a W-9 to fill out, which you will keep on record. Often, contractors will invoice you for the work they’ve completed, and you will issue a check to pay for the invoiced amount. However, your contract could also specify a single payment or payments that are made on a schedule. Independent contractors can be paid by the job or by the hour.

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Setting Wages

There are a number of tools you can use to determine the fair market wage for the position you need to fill. Some companies are pretty transparent to the public about what they pay their workers, while others are more protective of that information. It depends on the industry, the company ethos, and several other factors.

Using a website like Payscale can be a starting place. If you are going to be filling multiple positions or hiring on a regular basis, you may want to solicit the input of a recruiter for your industry. Hiring a recruiter or a HR consultant can be a great way to know for sure that you are on the right track with the wage-setting process.

Salary vs. Hourly: An hourly worker is paid an hourly rate for the time they work within the pay period. If an hourly employee goes over 40 hours per week, they are to be paid overtime. Salaried workers are not entitled to overtime pay, and they are paid a consistent amount every pay period regardless of the number of hours worked.

Determining Pay Frequency

You will need to determine how often you want to pay this employee. It’s important to note that depending on the job the employee will be doing, labor law may mandate pay frequency (manual workers are required to be paid weekly, for example). The options for paying employees are: weekly, bi-weekly, and monthly.

Minimum Wage

Minimum wage is governed by both federal and state policies. As of 2018/2019, the federal minimum wage is $7.25/hour. However, many states have higher minimum wage requirements, especially in states with higher costs of living. In New York State, the minimum wage is $11.10/hr as of December 31, 2018.

Employers should anticipate changes to the minimum wage in the coming years, whether on a state-by-state level or on a federal level.

Tipped Wages

If the employee is in the hospitality industry and/or is expected to be earning tips as part of their wages, this could have pay implications. Tipped employees can be paid at a lower wage and have other labor law implications, depending on the state.

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Exempt vs. Non-Exempt Status

Will the employee be exempt or non-exempt? This has implications for whether or not they must be paid overtime for any hours worked over 40 in a given week. There are federal rules for this. Many states have their own rules for this as well.

A non-exempt worker is entitled to overtime pay if they work more than 40 hours in a week. The overtime rate must be 1.5 times their normal pay. Non-exempt workers can be hourly or salaried and can work in any professional industry. Their non-exempt status is unaffected by how much they are paid.

An exempt worker is not entitled to overtime, and only salaried employees can be designated as exempt. They also must be paid $455 per week, and the tasks they perform must fit into the exempted categories.

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Filling the Position

There are a lot of policies, rules, expenses, and documents that go into hiring your first employee. The task of actually filling the position is likely one of the more exciting parts of growing your business. We have put together some best practices related to filling the position, which we hope helps make this process run smoothly.

Creating a Job Description

When you create the job description, it should be clear, detailed, and concise. Some of the requirements for a great description include:

  • A specific job title that clearly communicates what the position is, but also stands out from other job titles in the long list of advertised positions.

  • A brief job summary that avoids jargon and language that doesn’t make sense to people outside of your company.

  • Some information about your company culture and values.

  • A detailed job description that accurately describes the work to be completed by the person who is hired. This should still be concise, even though it needs to be detailed.

  • The required and preferred qualifications, educational background, experience, and certifications you are looking for in a candidate.

  • A list of both soft and hard skills that will be needed.

  • Information about the location of the position and whether it can be done remotely or not.

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Advertising the Position

Jobs can be advertised on general job application websites, industry-specific sites, and, occasionally, via social media. You may also choose to work with a professional recruiter to ensure that you get the job description in front of the right candidates.

Employer's Guide to Talent Attraction

Best Practices for Interviewing

Often, advice about job interviews is targeted towards the job candidate, rather than the interviewer. When it comes to best practices for interviews, it is important to keep in mind the goal of the interview: to go beyond the information you get from the paper application and resume of a candidate and understand who they are as a person and a potential employee, colleague, or team member.

You likely already know answers to some of the questions you’re going to ask, but this is your chance to evaluate how the candidate presents the answers, and how they present themselves. Here are some things to remember when preparing to conduct a job interview:

  • Prepare your questions in advance. Make sure they make sense and aren’t overly dependent on industry or institutional jargon that your candidate may not be familiar with.

  • Don’t forget that you are also trying to make a good first impression. In a candidate-driven market where top-tier talent often has several options of employment available to them, interviewees are taking into consideration what your demeanor, attitude, and preparedness say about the work environment and whether or not they want to come on board.

  • Don’t bring too many people into the interview process. If the candidate has to meet a dozen people and try to remember everyone’s name and role, they are probably going to be a little overwhelmed. Limit the involvement of other colleagues or partners to one or two other people in the interview setting.

  • Ask sincere questions, rather than cliche ones.

How to Extend an Employment Offer

When you are ready to extend an offer of employment, you can do so in a number of ways. You can extend the offer in person, as soon as the end of the interview, or you can wait to call them or write them afterward.

It is important to have a written document to support whatever offer you make, even if you are making the offer in an informal way. The written document is something the candidate can review in the decision-making process. The offer you make should specify the following:

  • The position/job title

  • An accurate job description

  • Salary and benefits information

  • Start date

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Running a Background Check

In some industries, running a background check is a state or federal requirement. In others, it’s simply a good idea. We recommend that you run a background check on new hires to prevent any surprises down the way. Generally, employers cover this cost. There are numerous programs and websites that will run a background check for you. Complete Payroll provides quick, trustworthy, and affordable employee background check services for employers looking to screen potential new hires.

Set up an Employee Background Check with Complete Payroll

Employee Referral Program

Creating an employee referral program: One of the best ways to get new employees into your company or firm is to have a strong employee referral program. Today’s hiring climate means that workers have a lot of room to decide where they want to work and whom they want to work for, and the influence of friends, colleagues, and acquaintances who are happy with their workplace can’t be overstated. Referral programs incentivize finding ideal candidates to come work for you.

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New Hire Onboarding

Once the offer is extended and accepted, employers must complete a series of tasks to ensure the employee is being onboarded properly and the business remains compliant in the process. This involves both documentation and training tasks.

I-9 Form

Verifies the identity of the employee and the fact that they are authorized to work in the United States.

W-4 Form

Filled out by the employee to determine how much of their paycheck is withheld to pay federal taxes throughout the year instead of having everything due during tax season. 

Form: I-9

Download the I-9 Form which legally verifies the employee's ability to accept employment in the US.

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Form: W-4

Download the W-4 Form which your employee will use to schedule their federal income tax withholding.

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State Tax Withholding Form

Similar to a W-4, but for state taxes instead of federal. (States that have no income tax will not provide this form to their employees.)

Employee Information

You will need to collect your full name, address, SSN, emergency contacts, and perhaps additional information to keep in the employee’s file. Our New Employee Form is available for you to download and use for collecting all of the required information.

State Income Tax Withholding Forms

Use the link provided to browse income tax withholding forms by state.

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Personal Information Form

Download a personal information form to collect important info about your employee to keep in their file.

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New Hire Reporting

The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) requires all employers to report all newly-hired employees (including re-hires) to your state. Federal law doesn't require you to report your hiring of independent contractors, although some states do require it. New hire reporting applies to all private, public, government, and non-profit employers. In other words, no business is exempt from new hire reporting.

Click here to search and view the new hire reporting requirements for your state.

States typically use new hire reporting information for the following tasks:

  • Speed up the child support income withholding order process
  • Collect child support from parents who frequently change jobs
  • Locate non-custodial parents
  • Detect fraudulent recipients of unemployment insurance
  • Prevent and stop unlawful welfare assistance
  • Stop false workers' compensation claims

NYS New Hire Reporting

If you're an employer in New York, you are subject to completing new hire reporting and must provide the following information:

  • Employee name (first, middle initial, last)
  • Employee address
  • Social Security Number
  • Employee hire date
  • Employer name
  • Employer address
  • Employer Identification Number (assigned by the IRS)
  • If dependent health insurance benefits are available to the employee and if so, the date the employee qualifies for benefits

Employers are subject to a penalty of $20 per employee for failure to report newly-hired employees in a timely fashion AND/OR failure to file a report showing all the required information.

NYS New Hire Reporting Center

Click here to complete your new hire reporting electronically through the NYS Department of Taxation and Finance.

Visit now

NYS Employee Onboarding Kit

Click here to access Complete Payroll's free resource for employers that takes you through all the steps of properly hiring and onboarding employees.

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Payroll

Employers need to set up payroll for their new employees, and there are several decisions to make about how that will be done. This section will overview everything you need to consider for this stage of the process.

Outsourcing Payroll vs. DIY

Some employers choose to go the “Do-It-Yourself” route for managing payroll, which means being the person who is responsible for payroll accounting, payment disbursement, and all payroll taxes and fees. You can do this through a number of software programs, the most popular of which is QuickBooks. We generally recommend an e-payment system rather than paper checks, as you can save both time and money by enrolling your employees in direct deposit.

There are some liability issues with managing payroll on your own that are important to take into consideration, especially in a small business where there are fewer people overseeing the process and catching potential errors. Here are some of the problems we have seen employers get into with DIY payroll management:

  • Miscalculations of payments and withholdings. This can mean accidentally withholding too much or too little, incorrect reporting of pay rates, improper verification of bills, etc.

  • Simple errors and mistakes in recordkeeping.

  • Intentional errors. Unfortunately, there will be times when businesses unintentionally employ unscrupulous people. Payroll is one of the places where funds can go missing through the underhanded actions of problem employees.

  • Incurring penalties from missing deadlines, miscalculating pay rates, or making mistakes in various legal forms and documents.

  • Security gaps, in which employee and employer information is vulnerable to being accessed inappropriately by individuals inside and outside the company.

One of the best ways to avoid these penalties, risks, and general payroll-related headaches is to outsource this part of your business to the experts. Professional payroll companies can manage every aspect of your business’s pay, from tax forms to direct deposit and post-pay record keeping.

Request a Payroll Quote

Live Checks

Some small businesses still use paper checks, often called “live checks,” even though the frequency of check cutting has decreased dramatically in the past twenty years.  Companies that continue to print, sign, and mail paper checks to employees may prefer to do so because of something as simple as “it’s what we’ve always done.”

There is also the fact that e-payments, while common, are not completely prolific throughout all vendors. When it comes to payroll, some businesses provide paper checks because they don’t want to obligate all employees to use direct deposit. However, the paper check system does create delays in the payroll process, as well as opportunities for error and fraud. There are also expenses associated with live checks that can add up to some pretty substantial numbers, especially if you end up employing several people.

Direct Deposit

If you employ workers in a state where employers are permitted to require employees to enroll in a direct deposit program with their bank, you should go ahead and make that a requirement. If you’re not permitted by law to require it, you can incentivize direct deposit in a number of ways.

Sometimes it is a matter of conveying to employees the benefits of getting paid immediately on payday, with no potential for delays in receiving a paper check. Some companies also provide a monetary incentive for enrolling in direct deposits, such as a gift card or a small bonus.

Direct Deposit Form

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Paying Commissions and Bonuses

Depending on your employment structure, you may choose to offer commissions or bonuses to your employees. These are payments that are in addition to the employee’s regular salary and benefits. They can improve morale and performance when handled well.  

Commissions are based on specific performance tasks, such as reaching a sales goal. We recommend having a straightforward formula for commissions because a lack of transparency in this process can cause frustration and annoyance in your workers, which is the last thing you’re trying to do with commissions. Don’t forget to look into the tax rate for commissions, which is often different than the regular income tax rate.

Different from a performance-based commission, bonuses are awarded more frequently as an annual, seasonal, or occasional event. Bonuses are taxed at a rate of 22%.

Understanding Payroll Taxes

Employer Taxes: Employers are responsible for withholding FICA, which is calculated as follows:

  • 6.2% Social Security tax
  • 1.45% Medicare tax
  • 0.9% Medicare surtax (for employees who earn over $200,000 annually)

Employers must also cover what is called the employer’s portion of the same percentages of their employees’ Social Security and Medicare tax. That means you’ll pay 6.2% in Social Security and 1.45% for Medicare. For each employee, you withhold 6.2% of their wages for Social Security and also pay 6.2% yourself. You’ll withhold 1.45% in Medicare tax and pay 1.45%.

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Timekeeping

Many employers may want a timekeeping system that manages time worked, vacation time, accruals, and other critical employee data. This is most crucial for hourly employees but often helps salaried employees as well.

Tracking Time for Hourly Employees

When you begin tracking time for hourly employees, it is important to ensure you are paying them fairly and remaining compliant.  Things like ensuring they have a minimum 30-minute meal break after 6 hours worked, that their hours are being rounded fairly and that overtime is properly managed and paid are all essential components of an hourly employee.  While non-essential, you may also want to offer paid benefits, such as vacation time and holidays. Whether essential or not, managing these aspects of hourly employees can be tricky and time-consuming.

Timekeeping Software

There are a number of software options available for your hourly employees. Free time tracking programs are available, though sometimes glitchy and unreliable. There are plenty of high-quality, affordable timekeeping apps and programs that can be used by employees in a wide range of industries and working environments.

Apps are now frequently used by employers to track their workers’ time, and often the usage fee for these apps is not very expensive. The best apps or software will integrate effectively with your payroll system so that you are not losing time entering timekeeping data into your payroll program.

Request a timekeeping software demo

Timekeeping Hardware

Depending on your work environment, you may choose to have a timekeeping clock. You may be envisioning an old punch card system, but today’s timekeeping clocks for hourly workers can be much more sophisticated. ID cards, fobs, and passcodes can be used to clock in and out. Of course, your hardware should be integrated with your payroll software, as well.

Employee Scheduling

This is ideal for employers that may need to work through multiple employee shift scenarios. Employee scheduling apps can use data to create a reliable shift schedule based on a lot of factors, including the intricacies of worker availability and changes in operating hours. This is very common for restaurants and retail employers.

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Employee Benefits

In this section, we want to help you understand what types of benefits you may wish to offer your employees. Although benefits vary widely from one company to the next, highly qualified job seekers are going to be interested in companies that provide a competitive benefits package in addition to their salary and any commissions or bonuses.

Paid Time Off (PTO)

PTO is expected by salaried employees and many hourly ones. In fact, PTO is frequently ranked as the second most important benefit that employers provide, only trailing behind employer-sponsored health insurance.  Your company’s PTO policies will cover vacation days, sick days, and personal days, and you have the flexibility to decide how much control you want to have over the use of those categories.

The Bureau of Labor Statistics states that the average first-year employee can expect 10 days of PTO annually. Often, employers provide more PTO the longer an employee is with the company. You will need to decide if PTO (or certain portions of it) can be banked to roll over from year to year, or if there will be a “use it or lose it” system. Be aware that there are benefits and drawbacks to each strategy.

Health Insurance - Medical, Dental, Vision

Employer-sponsored health insurance is the single most important benefit to most employees. As of 2015, employers with 50 or more Full Time Equivalent (FTE) employees are required to provide medical health insurance to full time employees. Choosing not to do so will lead to a tax penalty. Companies with fewer than 50 employees may be eligible for tax benefits by providing insurance anyway. Dental and vision insurance packages are also popular with employees.

If you provide health insurance, you can negotiate with multiple health insurers to get the best rates for what the company contributes and what the employee contributes. You will also need to decide who will assume the risk if your actual costs exceed the expected ones. You can choose to be self-insured vs. fully insured, and the insurance companies you talk to can help explain the differences and benefits to each insurance strategy.

Healthcare Spending or Reimbursement Accounts (HSA, FSA, HRA)

Some of your decisions related to HSAs, FSAs, and HRAs are going to be determined by the health insurance package that you provide. For example, you cannot provide an HSA (Health Savings Account) if your employees are not also enrolled in a High Deductible Health Plan (HDHP). Your insurance company can provide guidance in this area. However, here are some definitions that you may find useful:

  • Health Savings Account (HSA): a savings account that an employee can put pre-taxed funds into throughout the year. Employees can also contribute to HSAs. HSA funds roll over from year to year and do not have to be spent within a given amount of time. In fact, the person who holds the HSA funds can use the money even after they are no longer covered by the plan or employed by the organization. HSA funds can be used for any medical expense. The individual limit on HSA contributions is $3,500 in 2019. That could change though. The IRS sets an individual and family limit on the amount that can be contributed to an HSA each tax year.

  • Flexible Savings Account (FSA): a savings account that is limited to $2,700 for an individual in 2019, and the funds must be used within a certain amount of time or they are forfeited. Employees typically fund their own FSAs, although employers can contribute if they want to. Some companies allow employers to contribute to both an HSA and a FSA. Once again, the limits are changed by the IRS each year.

  • Healthcare Reimbursement Arrangement (HRA): When you offer an HRA to your employees, you set a specific reimbursement allowance that they can use on a monthly basis to cover medical costs. Some reimbursement plans allow employees to fund their health insurance using this money.

Retirement Accounts

A 401(k) is a retirement account offered through an employer. Typically, employers have a set amount of funds that they contribute on a monthly basis, and employees can also have a portion of their pay withheld to be placed in the account.

A 401(k) can follow an employee from one employer to another, and there are significant tax benefits for the employee contributor. There are also tax penalties should the worker need to access money from the 401(k) before retirement.

There are several other types of retirement plans, including:

  • 403 (b)
  • Simple IRA
  • Roth IRA
  • SEP IRA
  • Pension plans

Disability Policy

You will need to decide what disability policies to offer to your employees. More employers offer short-term disability than long term, although recent trends show that 33% of employers provided long-term disability coverage in 2014, and 39% provided short-term.

Employees don’t generally contribute to short or long term disability coverage, as these costs are covered by you, the employer. The BLS states that, “the cost of access for short-term disability and long-term disability across all private industry workers is $0.30 per hour worked.”

Tuition Reimbursement

If you provide tuition reimbursement, you can pay back education-related expenses to your employees who are pursuing further education that is connected to their work. Some employers choose to reimburse significant portions of tuition and related costs, while others reimburse at a smaller percentage.

You may also set restrictions such as requiring employees to stay with your company for a certain amount of time after the reimbursement or be mandated to pay back the costs.

Childcare Benefits

Providing childcare benefits typically comes in the form of a pre-tax contribution to an FSA or other account that can be used to pay for licensed childcare costs.

Wellness Programs

Wellness strategies are an attempt to lower healthcare costs by improving the general health of the employees in a company. You can incentivize healthy habits through a number of methods. Employers often offer financial incentives to participate in these wellness programs.

Payday Advances

This is a less frequently offered employee benefit, but some companies do offer payday advances to employees. This prevents employees who are in need of cash from becoming beholden to predatory lenders and payday advance companies.                    

The amount of the payday advance can be deducted entirely from the next paycheck or in increments over the next several paychecks.

Other Employee Benefits

There are other employee benefits that you may choose to offer, including:

  • Short and long-term disability

  • Life insurance

  • Paid parental leave

  • Long term care insurance

  • Telecommuting/work from home

Get Help Paying for Your First Employee

Hiring your first employee is an exciting step in the growth of your business. It can also be intimidating. For every decision you need to make, there are benefits and drawbacks. If this process seems a little overwhelming, we understand.

At Complete Payroll, we have helped thousands of employers throughout the country hire millions of employees over the last 26+ years. 

If you want to relieve yourself of the laborious tasks and burden of remembering every detail required to stay compliant with local, state, and federal laws, connect with us right away! We look forward to helping you make your hiring process run smoothly and efficiently.

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Arden Neubauer

Hunt Hollow Ski Club

Hunt Hollow Ski Club has tried other payroll companies from time to time, but always return to Complete Payroll because we have an assigned specialist who knows our needs inside and out, is knowledgeable, easy to reach and very responsive. My questions and concerns are addressed in a VERY timely manner and I never feel that I have to handle sticky issues alone.

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Bahar Uttam

Soderberg Insurance Services Inc

I have been working with Lacy Smart and her team for the last few years. I have been impressed by her responsiveness, accuracy, and high level of providing client satisfaction. She and her team are a wonderful testament to the organization!

Bobby Luu

Kenrick Maintenance Corporation

Ashley from Complete Payroll has always been helpful. It seems that whenever we have a challenge, Ashley is there to help us through and does it well. Her customer service skills are excellent.

Bonnie Deneef

Nuttall Golf Cars Inc

I have worked with a few different payroll providers during my career. Complete Payroll is absolutely, by far, the most proficient and customer service-oriented provider I have been privileged to work with. Lindsay Ezard goes above and beyond to assist me with any question I may have. Thank You Lindsay!

Carol Grover

Keuka College

The team at Complete Payroll is always responsive, always helpful, and always professional. They have gone above and beyond over recent years to assist Keuka College in creating efficiencies, maintaining compliance, and improving processes. Complete Payroll is a trusted partner, a valued resource, and a respected adviser.

Cathie Rene

Rochester Hearing and Speech

My experience with Complete Payroll has been exceptional. I was a novice to payroll so my learning curve was big. Andrea is wonderful helping me navigate payroll and not just fixing my errors but explaining what I did or did not do.

Cathy Pace

Finger Lakes Wrestling Club Inc

We were referred to Complete Payroll years ago by a board member and haven't looked back since. When I first started working with them, I knew nothing about payroll. My first rep Lacey, and now JoAnn, are great to work with. Working with Complete Payroll has just been a wonderful all-around experience for me.

Cathy Schuth

Hilton Health Care PC

We very much appreciate the quick service. If I need a special report it arrives via email within one business day, if not that day.

Christina Wagar

Dr. Christopher Mozrall

Complete Payroll is a great payroll company, and we love Lacey! She always has the answers to my questions without hesitation. There is very little (if any) wait time to get a call back.

Colleen Koll

Shear Ego Salon & Spa

The first suggestion I made after I joined Shear Ego was that if they were not yet using Complete Payroll, they should be. We continue to be impressed and happy with the quality and friendliness of service, and the excellent newsletters and up-to-date information on all things payroll and HR.

Debbie Klymkow

Boulevard Van City

We moved to Complete Payroll about 3 years ago. It was seamless and working with Lacy Smart on Mondays is a breeze.

Diane Romano

ROMOLD Inc.

People do business with people, not with corporations. In over 20 years, we have only had two customer service reps. Instead of feeling like we are one of 10,000, CP makes us feel like family! We count on Lindsay getting it right, and she always does. Even when we go outside the box, all is as we expect it!

Dick Eakins

Norco Farms

Complete Payroll fits my budget, I never get bounced around between customer service reps, and it's very easy to enter my payroll. I simply take a photo of my payroll sheet and email it to my rep. There's never a problem! With them, it's business done, and business done right.

Don Cunningham

Town of Bergen NY

Complete Payroll Processing provided an easy transition from internal payroll processing. With payroll as their core competency, CP has the expertise to help mitigate errors and ease the burden of annual updates. Comprehensive reporting gives all the details needed and an organization can operate with an added piece of mind knowing that the payroll service is taken care of.

Eileen Reeves

Catholic Charities

After nearly 10 years, we are receiving the same or better service than when we started. The ability to reach our dedicated customer service representative in a timely manner is huge when there are deadlines in play. Requests for unique reports and integration with our other vendors has been handled without hesitation. We truly feel a partnership with Complete Payroll.

Elmira Dewes

Elite Roasters

I am very happy with your service and your website is easy to use. Employees are so responsive and ready to help with any questions. Andrea responds quickly to email, Tracy did everything from the beginning to get us started understanding and entering payroll, and Sydney's training was just super helpful.

Emily Wyse

Wyse Properties

I just love Lindsay! She does an awesome job! She is very responsive and I like that she teaches me how to find things rather than just doing it for me.

Geri Vitullo

English Road Pediatrics & Adolescent Medicine, LLC

When our business began in 2005 I knew right away which payroll company we would use. I have had exactly 2 payroll specialists since then, and I feel like they know me & our company. I am not shy to ask questions & if they don't know the answer I am always pointed in the right direction. I have every confidence in my payroll specialist, Lindsay and the company she is with!

Gwen Jones

Mack's Body Shop, Inc.

I have had the great pleasure of working with Payroll Country for almost two years now. Tiffany was my original CSR and was very helpful, courteous, and was always there whenever I needed help. So far, my experience with my new rep, John, has been wonderful as well. I look forward to working with Complete Payroll for many years to come!

Howard Clarke

H Clarke Services

We have been with Complete Payroll for quite awhile now and plan on staying. Thanks!

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Jeff Allen

Crossroads House

Crossroads House has been using Complete Payroll for several years now. Their service is fast, friendly and accurate. Whenever we have payroll documentation needs arise for our employees, Complete Payroll always gets the job done quickly and efficiently. We are proud to count them as one of our many community partners.

Jill Bonnell

Swagelok Western New York

We have received excellent and attentive service for over 10 years now. We have come to rely on Complete Payroll's consistency and very low turnover. We appreciate the chance to know our rep and they get to know us and our needs as a business. If we have payroll or general HR questions, Complete Payroll has the answers for us.

Joanna Bates

Inn at Houghton Creek

Great customer service combined with a reduction in processing fees made the decision to stay with Complete Payroll an easy one. Our customer service representative, Kendall, always gets back to us quickly, and she is always very helpful and friendly. Also, the training that we received from LeeAnn was thorough and beneficial.

John Worth

Town Of Pembroke

We have been well served by Complete Payroll. When we have needed support, it was given both in payroll and other employee matters, like handbooks.

Judy Mcdonald

Antonucci Law Firm

It has been great working with everyone from Complete payroll. Everyone through the years have always been great. They take your phone calls every time, and always go above and beyond what you need. We have been customers for years and will continue for years.

Kelly Stephenson

The Service Collaborative of WNY, Inc.

We have been using Complete Payroll for over five years and have found them to be responsive, professional, friendly, and cost effective. Customer service is best judged when something goes wrong. Complete Payroll is always there immediately to help fix the issue. Complete Payroll is a payroll partner, not just a payroll service.

Linda Moore

Tiffany Transportation Services LTD.

I have worked with many payroll companies throughout my career and Complete Payroll surpasses them all in personalized service. My CSR is Andrea and I have always received assistance in a timely manner. Keep up the great job!

Lisa Carpenter

Olean Wholesale Grocery Coop., Inc.

Complete Payroll is the best choice that I have made for our payroll and HR services. Anytime I have called customer service, there is always a happy and knowledgeable person on the line to help us out! They have done anything I have asked of them in a quick and efficient manner! I would recommend them to anybody!

Nancy Woolver

Financial Service Company

What I love most about Complete Payroll is the quick resolution and response. There are not many issues, but like anything in life, issues happen. Complete Payroll is the best at acknowledging the issue and resolving the problem quickly. My rep is fantastic to work with, and I refer Complete Payroll whenever I can!

Paul Cronk

Fillmore Wesleyan Church

I've been very pleased with the service and responsiveness of my CSR, and CP's continued dedication to provide us with all the tools we need to have a successful payroll and HR experience. You are always available when I have a question and always make sure that any problems that arise are worked through to my satisfaction.

Paul Martin

Elite Armed Response Service, LLC

I can not fully express my satisfaction with Complete Payroll's personalized service, directed to my specific business needs. They are always there to make suggestions on how to make my experience better. I highly recommend Complete Payroll to anyone that has a business, large or small. You will not be disappointed!

Shane Gustafson

A Gust of Sun Winery

Complete Payroll has, by far, been the easiest and friendliest company we have ever worked with. They are quick to respond to any questions I am having, and they also have a great pricing structure.

Shivaugn Ahern

Central American Healthcare Initiative Inc.

The attention to detail in the customer experience and the consistent friendliness of the Complete Payroll team really make the difference. Liz, Mona, LeeAnne, Brandi, and Lacy have all been great to work with.

Sue Horn

Brian Horn's Auto Repair, Inc.

Complete Payroll's service, loyalty, and family atmosphere is second to none! We NEVER have any mistakes, and payroll is always on time. When I have a "Brain Fart" and forget to call in payroll, my rep Lindsey has my back. Our company will always be with Complete Payroll, and I recommend them to anyone who asks. They get an A++ rating in our book!

Susan Munsch

Evergreen Trails Campground

We couldn't be happier with Complete Payroll's service. Prompt and professional, every concern or question is addressed immediately. Our rep Lacy is an absolute pleasure to deal with. We have every intention to continue our working relationship with them for years to come. It is a load off to know that this part of our business is "worry free."

Teresa Bullock

Sorge's Restaurant

We chose Complete Payroll because we get personalized attention for a great price. I always get my questions answered by a competent, patient person who make me feel like a person not an account! My girl Lacy is great!

Teresa Jackson

Dudley Poultry

We have been customers for many years. Evolution Software is easy to use but, more importantly, Cindy is an email away and her knowledgeable, efficient, and quick to replies to our questions are appreciated. We're very happy with Complete Payroll.

Tina Canali

Chemung County SPCA

Complete Payroll is always there if we have a problem or need something special! Their response time is AWESOME!

Denni Harbaugh

Independent Title Agency, LLC

My CSR, Andi Dimmick, is The Bomb! She's always friendly, cheery, and with all her clients, makes me feel like she has carved time out for ME. Her customer service is AWESOME, and the personal touch means so much!

Elvira Aletta

Explore What's Next

Everyone I talk to at CP is friendly and tries to help. If they don't have a ready answer, that's OK. They take the time to find one. Website is user friendly, too. The actual operation of payroll is dependable and reliable.

Theone Kalkinis

Peregrine Walton LLC

On the ball with pertinent payroll and HR topics - love the payroll system and customer service!

Peter Varlan

Mitchell T. Yencer

Things go quite smoothly and I have a very good rep: Megan!

Norlene Boone

GP Rochester, Inc.

Kari Sutton and her team always are there ready to help me with any questions or concerns. The reports are easy to read and complete with the data I need for the job! Thank you, Kari!

Cindy Van Buren

Heritage Packaging

Great customer support and service!

Bob Bolt

KTS Management, Inc

Easy to use! My rep, Ashlee Adams gives great customer service, and I love the options you have while still being affordable.

Joanne Hooven

Occupational Management Group

LeeAnn was very helpful, very thorough, patient, and professional, and pleasant! She is an excellent trainer!

Gregory Geraci

Jack of All Trades

Leanne was very helpful!

Rachelle Lyons

JD Burkhardt, Inc.

LeeAnne was very helpful in explaining the program with me and answered all my questions. I look forward to trying it out on my own next week!

Lisa Lyons

Attica Auto Supply Inc

Friendly, answered all my questions, and never felt hurried.

Bonnie DeNeef

Nuttall Warehousing LLC

LeeAnn was just wonderful to work with.

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