Employees Cause a Lot of Transactions
Employees are often the single biggest expense a company can have, as you will see. Not only that, they also bring on a lot of transactions and add more accounts to your system. First, you have to pay them, and that's usually a big expense in itself. On top of that, though, your business is responsible for extra taxes and some insurance. Finally, your company has to comply with all local, state, and federal requirements, most of which are in place to protect your employees, and some of which come with a price tag.
You also may incur some employee-related expenses that are voluntary. Most of these will actually come with two costs — money and time — but may bring you better and more loyal employees. Those extras include things such as paid holidays, sick days, and vacation days; health, dental, and vision plans; life insurance; and retirement plans. To keep up with the accounting and filing duties required by these benefits, many small businesses turn to payroll services, which is an added but very cost-effective expense.
To escape the extra costs and responsibilities that come with employees, a lot of new and small businesses enlist independent contractors. This can save you a lot of money and a lot of headaches. If you decide to go this route, be sure to read over the many advantages and potential pitfalls of using independent contractors instead of employees.