Moving the crew onto payroll: what does it actually cost?

Putting contractors on payroll adds employer payroll taxes, unemployment, workers compensation and paid sick leave to every hour worked. If prices stay where they are, that money comes out of the owner. This shows how much, and the rate that puts it back.

Your business today

Wage now, on contract$25.00Wage once on payroll$27.50Labour hours a month196 hMoney in, a month$8,740Running costs a month$1,407

Today

$2,433

On contract

Do nothing

$396

On payroll, same prices

At $55 an hour

$2,436

On payroll, new rate

Moving to payroll and leaving your prices alone costs you $2,037 a month for exactly the same work. Holding your income is not greed; it is standing still.

What one labour hour costs you on payroll	$42.57
What you charge now, per labour hour	$44.59
Rate that holds your income	$55
What that does to the whole book	+23.3%

An estimate from the rates we publish, not advice. Your unemployment rate and your workers compensation rate are specific to you — confirm both before pricing from this.

What this does not do

It does not tell you whether your people should be employees. That is a legal question about how the work is controlled, and it is one for your accountant and your attorney.

It also does not file anything. We work out costs and export hours; a payroll provider runs payroll.

How the hourly figure is worked out