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Do You Really Need an Employee?

Your business is growing. You are busy every day and you have more work than you know what to do with. But you are growing more and more frustrated. Why? Well because you know, there is a limit to how much work you can do all by yourself. And you keep revisiting the same question over and over again….

“Should I hire someone to help me?”

This is a question that crosses just about every small business owner’s mind at some point. But the answer will vary….depending on your needs, your budget and your overall business strategy. 

So let’s dig into this a little bit deeper.

Transitioning from ‘Entrepreneur’ to ‘Employer’

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Photo by Christina Morillo on

Let’s just cut right to the chase. Salary expense is one of the biggest expense items for many businesses. So the decision to hire an employer is a major one. Your current cashflow should be able to handle the new employee’s payroll and benefits. You should also seriously consider periodic pay increases over a five year period (many people will not be satisfied with being paid the same rate for several years in a row without a pay raise). If you opt to hire a part-time employee, you could save a bit on benefits. But you should also be honest enough to admit that the turnover with part-time employees is pretty quick. Remember, the average cost to hire an employee is $4,000 – and it takes 52 days on average to fill an open position.


It is also important to remember that once you become an employer, then you need to register with the respective state department of revenue in every state that your employees reside. You may also need to set up a separate account for unemployment insurance tax. In some states, those two are combined….in others they are not. So it is crucial that you confer with a payroll professional before you hire any employees. Keep in mind it can take up to several weeks for your application to be processed. So please (please) give this process plenty of time.

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Photo by Kampus Production on

Processes Before People

Before you make the leap into trying to hire an employee (or two), you should do a thorough review of your current operational process. Perhaps you don’t need an employee at all. Maybe you just need to refine and streamline your operations and processes and then you’ll find that a new employee is not really needed at this time. Even if you confirm that a new employee is needed, remember this:

“Throwing people and/or tools at a broken process does not fix anything. Many times, it just makes things worse!”

Next step is to create a comprehensive, but focused job description. Create a job title. Research the current salary rates for that job title. Make adjustments as necessary. Once you settle in on a gross salary, add in another 15-20% for fringes, benefits and incidentals.

(Seriously) Consider a Contractor/Freelancer

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Photo by Andrea Piacquadio on

Believe it or not, there is a happy medium between working yourself to death as a soloprenuer and struggling to make payroll every two weeks. You can hire a contract/freelance worker. You may pay a higher hourly rate; but you can also tap into the skills and resources you need for a fraction of what an annual salary for an employee would be. You can also disengage from a contractor if the work dries up or the additional help is no longer needed. Alternatively, you can opt for a contractor to perform the tasks that would be traditionally done by an employee (i.e. bookkeeping, executive assistant, etc.) on a long term or even permanent basis.

The Cons?

Well, simply put contractors are not employees. You do not have as much control over them in regards to when and how they work. It is also a two-sided coin in that they can disengage from you as easily as you can from them (although the particulars would be ultimately laid out in a contract — and if either side breaches it, you could be getting up close and personal to a civil law suit).


If your business has scaled to the point where you are ready to hire your first employee; then you are definitely on a growth trajectory and it is a milestone to celebrate. Green Beacon Business Services has partnered with Gusto to provide people advisory services. What is people advisory? People advisory is payroll and other human resource solutions that are presented as one holistic solution to small businesses.

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