Ongoing costs
Since hiring an employee is an ongoing monthly cost, your estimate weighs the monthly salary you enter, plus payroll taxes and other extras, against your income and any existing debt, showing how much room it would leave in your budget.
These key factors affect hiring affordability
Base salary plus the fully-loaded cost
A $4,500 monthly salary alone understates the real cost of an employee; between payroll taxes, workers' comp, and benefits, employers typically pay an extra 25-40% on top of gross wages, which is why this calculator adds payroll taxes & workers' comp ($550/month, commonly budgeted as roughly 10-15% of gross wages) and benefits ($500/month) on top of the base.
Revenue reliability before committing to fixed payroll
Unlike variable costs, payroll is a fixed monthly obligation regardless of how business is that month, so most advisors suggest having at least three to six months of the fully-loaded salary in reserve before hiring your first employee.
Onboarding and equipment costs
A laptop, software licenses, and other tools needed to get a new hire productive, the $100 monthly equipment & software line, are often overlooked in hiring budgets but add up quickly, especially for remote or technical roles that require specialized subscriptions.
How to use your results
- A green result suggests the fully-loaded cost of this hire likely fits your current revenue with room to spare.
- A yellow or red result is worth pairing with a look at whether the hire is tied to a specific contract or predictable revenue stream.
- Include payroll taxes and benefits in the total even if you're tempted to budget only the base salary, since that's rarely what the hire actually costs you.
- Recheck the estimate before extending an offer, since benefits and equipment costs can shift once you have real quotes.
Ways to make hiring an employee more affordable
- Start with a part-time or contract hire instead of a full-time employee to test whether the workload justifies the fully-loaded cost.
- Shop group health insurance plans through a PEO, or professional employer organization, which can lower the benefits line versus buying coverage independently.
- Time the hire to a season or contract with predictable revenue, so the fixed payroll cost is covered by expected income rather than a hopeful guess.
- Use refurbished equipment or existing software licenses where possible to cut the equipment & software line.
More career & life changes calculators
Nothing added yet - add something to see your risk.