Overhead costs of an employee in the USA refer to the additional expenses that employers incur beyond the employee’s direct salary or wages. These costs can significantly impact a company’s budget and financial health. Some common overhead costs associated with employing someone in the USA include:
- Employer Taxes: Employers are responsible for paying certain taxes on behalf of their employees, such as Social Security and Medicare taxes (FICA), Federal Unemployment Tax Act (FUTA) tax, and state unemployment taxes. The federal payroll tax rate is about 15.3%, with the employee covering 7.65% and the employer covering 7.65%. According to FORBES.
- Benefits: Providing employee benefits, such as health insurance, retirement plans (401(k)), life insurance, disability insurance, and paid time off, can add substantial overhead costs.
- Workers’ Compensation Insurance: Employers must carry workers’ compensation insurance to cover potential work-related injuries or illnesses for their employees.
- Payroll Processing: The cost of payroll processing services, whether outsourced or handled in-house, includes expenses for software, personnel, and administrative tasks. Per Netsuit Many businesses operate with payroll percentages in the 15–30% range.
- Training and Development: Employers may invest in employee training programs and workshops to enhance skills and knowledge. According to Capterra companies should spend anywhere from 1 to 5% of their total salary cost on training.
- Office Space and Utilities: The cost of providing a workspace for the employee, including rent, utilities, and maintenance, contributes to overhead expenses.
- Office Supplies and Equipment: Expenses for providing necessary office supplies and equipment, such as computers, desks, chairs, and stationery, are part of overhead costs.
- Technology and Software: Costs related to software licenses, IT support, and technology infrastructure are included in overhead.
- Recruiting and Onboarding: Costs associated with hiring and onboarding new employees, such as advertising job positions, conducting interviews, and providing training, add to overhead expenses.
- Employee Perks and Amenities: Some companies offer additional perks like gym memberships, snacks, or transportation benefits, which contribute to overhead costs.
It’s important to note that overhead costs can vary depending on the industry, location, and size of the company. At Labor Manage Solutions, we make it easy to find the precise and suitable talent you need, ensuring your company’s success.