| One of the most difficult tasks in determining the cost of doing business is accurately calculating "Cost of Employee Administration". In other words, besides the salary/wages and benefit hard dollar costs it takes to employ a worker, what unproductive time and dollars are exhausted by the company in order to follow through with the obligatory employee administrative tasks that cannot be neglected by the business owner? Here are a few of the costly factors:
| It is difficult to precisely calculate your non-productive administration costs, but an accurate estimate is possible. The below graph was compiled from data from the U.S. Chamber of Commerce, the U.S. Labor Department and the Small Business Administration. Several comprehensive studies indicate 8.45% as a national average for small and and mid sized businesses. Bear in mind that many managers tend to underestimate their employee administrative costs, often as a result of wishfull thinking. |
- Calculate Gross Pay (Regular and O.T.)
- Calculate Federal Withholding
- Calculate and Deduct Payroll Taxes
- Make Garnishment Deductions
- Prepare Payroll Checks
- Sign Payroll Checks
- Transfer Funds to Payroll Accounts
- Issue Stop Payments on Lost Checks
- Replace Lost Checks
- Prepare Payroll Check Registers
- Prepare Deduction Registers
- Calculate Employer OASDI Contributions
- Calcuate Employer Medicare Tax Contributions
- Prepare W-2s and Mail
- Complete Form 941 and File
- Complete Form 940 and File
- Reconcile W-2s to 941s
- Prepare and Transmit W-3
- Reconcile Payroll Checks
- Answer Unemployment Claims
- Attend Unemployment Claims Hearings
- Shop for Workers' Comp Insurance
- Receive First Report of Injury
- Prepare Federal Tax Deposits
- Receive First Report of Injury
| Number
of
Employees | Manual
Payroll
System | Automated
Payroll
System | | 1-9 | 10-12% | 8-10% | | 10-49 | 8-10% | 6-8% | | 50-199 | 7-9% | 5-7% | | 200+ | 6-8% | 4-6% | - Prepare Notice of Injury Forms and File
- Notify Work Comp Carrier of Claims
- Obtain First Medical Report and File
- Maintain Interim Medical Bills
- Forward Medical Bills to Carrier
- Prepare and File Final Reports on Injury
- Maintain COBRA Eligibility Records
- Reconcile and Remit Medical Insurance Payments
- Reconcile and Remit Other Insurance Products
| "Government intrusion into private enterprise has made the "employee", once thought of as an asset, into a potentially profit robbing liability." -Unknown |
- Prepare for Workers' Comp Audits
- Give Notice of Eligibility Records
- Receive, Reconcile, and Remit COBRA Payments
- Enroll Employee and Dependents in COBRA
- Terminate COBRA Eligibility as Required
- Shop for Group Health Insurance
- Comply With Immigration and Naturalization Act
- Recruit & Train New Employees who are Replacing Those Who Left for Better Benefits
- Shop for Dental, Life and Other Insurance Products
Remember...What you spend for your time, space, equipment, training and consultation also contribute to your administrative costs.
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