Category: Employer Costs

How to Pay Your Employees Fairly Without Hurting Your Small Business

As a financial advisor for small business owners, I meet with approximately 300 unique business owners every year. Many are solopreneurs who prefer to stay solo. Others start alone but plan to hire as they grow. And some, like my husband and I did, need to bring on employees before they even open their doors.

When we opened our quick-serve pizza restaurant, we had to hire and train our team first. We paid minimum wage to teenagers seeking their first job, about 10% more to older teens with some experience, and 25-50% above minimum wage to adults with significant prior experience. It was a valuable early lesson in balancing what the business could afford with what it takes to attract good people.

One of the most common goals I hear from small business owners is the desire to create good-paying jobs. That’s a noble aim, and I respect it deeply. The Bible is clear on the importance of paying people fairly and on time. In Luke 10:7, Jesus tells His disciples, “The laborer is worthy of his wages.”

While Scripture instructs us to pay what is due and to do so promptly, it doesn’t provide specific guidance on determining a worker’s exact worth. That decision often feels challenging-especially when you’re hiring your first employee.

Here are practical, step-by-step guidelines to help you determine a fair and sustainable wage or salary.

Steps to Determine What to Pay an Employee

1. Define the job clearly.

List every task the employee will perform. What skills, education, certifications, or experience are truly required? The greater the requirements, the higher the pay should typically be.

2. Consider the working conditions.

Will the job involve difficult weather, unpleasant tasks, physical demands, or risk of injury? Jobs with tougher conditions usually command higher compensation to attract reliable candidates.

3. Research market rates.

Look at what other companies in your area are paying for similar roles. Competitive pay helps you attract and retain qualified people. You can find good data on sites like Indeed, Glassdoor, or your local Chamber of Commerce.

4. Review industry standards.

Industry reports can show average salaries and what percentage of revenue is typically spent on payroll. Keep in mind that national averages may not fully reflect your local cost of living—wages are often higher in high-cost areas and lower in others.

5. Determine what you can realistically afford.

Calculate how much additional revenue the new employee is expected to generate. Factor this into your budget to ensure the position is financially sustainable before you make an offer.

6. Factor in your local cost of living.

Consider the minimum salary that would allow an employee to maintain a reasonable quality of life in your area. If your industry traditionally pays lower wages, make sure your offer is at least above both federal and state minimum wage requirements.

7. Calculate the total cost of employment.

Look beyond the base wage. Include:

  • Employer portions of Social Security and Medicare
  • Workers’ compensation insurance
  • Health insurance contributions
  • Retirement plan matches
  • Any other benefits

Note that Paid Time Off (PTO) doesn’t usually create direct extra expense unless you need to bring in coverage.

8. Set a salary range and negotiate thoughtfully.

Establish a realistic pay range based on the factors above. Offer higher within that range for candidates who can contribute immediately, and lower for those who will need more training.

Final Thoughts

Taking the time to follow these steps will help you offer wages that are fair, competitive, and sustainable for your business. If you offer is too low, you’ll struggle to attract good candidates. If it’s too high for your business to support long-term, you risk financial strain or having to make difficult changes later.

The goal is to prayerfully find the balance-paying a wage that honors the employee, supports your small business, and allows both you and your team to thrive.

When you get this right, you don’t just fill a position. You invest in a person who can help your business grow while creating meaningful work in your community.

Small Business Owners: Free Up Your Time and Boost Profits with a Virtual Assistant

The demands of running a business are endless. As a small business owner, you’re responsible for overseeing daily operations, managing employees, handling financials, filing taxes, networking, planning marketing campaigns, making growth decisions—and that’s just the start.

It’s no surprise that many entrepreneurs experience stress and overwhelm.

One proven way to lighten the load is by outsourcing tasks that either fall outside your comfort zone or don’t require your direct decision-making. A virtual assistant (VA) can be an affordable, flexible solution to help you manage your workload while allowing you to focus on growing your business.

Tasks Commonly Outsourced to Virtual Assistants

Start by identifying which responsibilities you’re comfortable handing off. Many small business owners delegate tasks in the following areas:

Marketing Tasks

  • Creating ads and promotions for traditional marketing outlets
  • Developing content for social media platforms
  • Responding to comments and messages on social media
  • Creating and maintaining a marketing calendar
  • Graphic design and video editing

Administrative & Back-Office Tasks

  • Data entry
  • Scheduling appointments and meetings
  • Replying to customer inquiries and messages
  • Invoicing and recording payments
  • Paying bills

Bookkeeping Tasks

  • Recording daily transactions
  • Payroll processing
  • Reconciling bank statements
  • Maintaining ledgers
  • Filing insurance claims

Financial Reporting Tasks

  • Filing quarterly and annual payroll reports
  • Filing monthly sales tax reports
  • Running monthly profit and loss statements
  • Developing cash flow analyses

Technical & Web Support Tasks

  • Developing and maintaining your website
  • Updating site links and plugins
  • Providing IT support
  • Overseeing cybersecurity

How to Hire a Virtual Assistant

If you’ve decided a virtual assistant might be right for you, follow these steps to get started:

1. Identify Tasks to Outsource
Make a list of the duties you’d like a virtual assistant to handle.

2. Estimate Time Requirements
Determine how many hours per week these tasks will require.

3. Research Pay Rates
Check the going rates for the type of work you need in both the U.S. and international markets.

4. Evaluate Your Budget
Decide what you can afford. If needed, prioritize only your most time-consuming or uncomfortable tasks.

5. Create a Job Description
Be clear about responsibilities and required skills—such as bookkeeping certification, social media experience, or website management. If hiring internationally, specify proficiency in English.

6. Search for Candidates
You can find virtual assistants through:

  • Freelance platforms (Fiverr, Freelancer, Upwork)
  • Virtual assistant services (Zirtual, Time etc., Belay)
  • Referrals from your professional network

7. Screen and Interview Applicants
Look for:

  • Relevant work experience
  • Strong communication skills
  • Proven reliability and time management
  • Positive references
  • Optional: assign a short test task

8. Onboard Your VA

  • Set clear expectations for tasks and deadlines
  • Use affordable project management tools like Monday.com, ClickUp, or Teamwork.com
  • Provide regular feedback and encouragement

Final Thoughts

If you find the right virtual assistant and outsource the tasks that take the most time or cause the most stress, your workload — and stress level — can be reduced significantly. More importantly, you’ll free up valuable time to focus on the aspects of your business that only you can do.

While hiring a virtual assistant does require an investment, it can pay for itself in several ways. For example:

  • A skilled virtual assistant managing your social media accounts can increase engagement and attract new clients.
  • Delegating routine administrative or bookkeeping tasks frees you to spend more time meeting with clients, networking, or developing new services.
  • An assistant handling website updates or email responses ensures customers receive timely attention, which can improve customer satisfaction and lead to repeat business.

When you use your reclaimed time to focus on revenue-generating activities, your business can become more profitable — turning your virtual assistant from an expense into an investment.

If you’ve ever hired a virtual assistant, I’d love to hear your insights and advice in the comments!

Growing from Within: How Developing Employees Strengthens Your Business

The labor market has eased a bit over the past few years; however, many small business owners still cite hiring and retaining qualified employees as a top concern. One effective way to address this challenge is to invest in developing your current team. When employees recognize that they have opportunities for growth and advancement, they’re much more likely to stay and build a long-term career with your company.

Why Develop Employees from Within?

When you help your employees grow and develop new skills, you reduce the risks associated with external hiring. These employees already understand your company’s culture, values, and expectations. You’re also familiar with their strengths and areas for improvement, making it easier to place them in roles where they can thrive.

Developing your team sends a strong message to your staff that you value them and are invested in their futures. Over time, this can lead to lower turnover rates, higher job satisfaction, and reduced HR costs. Plus, it ensures that valuable institutional knowledge stays within your organization.

How to Identify Employees with Growth Potential

A key part of employee development is identifying those who have both the desire and the potential to grow. Here are a few questions to help you spot employees who may be ready for advancement:

  • Does the employee take advantage of optional training opportunities?
  • Do they ask for feedback after completing assignments?
  • Are they willing to volunteer for projects that stretch their abilities?
  • Do they embrace challenges with a positive attitude?
  • Do they encourage and support their coworkers’ growth?

If the answer to most of these questions is yes, you may have a great candidate for further development.

Steps to Develop and Retain Quality Employees

Once you’ve identified potential leaders within your organization, consider the following steps to help them grow:

  1. Discuss Career Goals
    Have an honest conversation about their long-term goals and whether they see a future with your company.
  2. Outline Growth Paths
    Show them what different advancement paths might look like and what skills or assignments they’ll need to get there.
  3. Provide Learning Opportunities
    Offer on-the-job training, mentorship, classes, certifications, or cross-training in different departments.
  4. Set SMART Goals
    Help them create Specific, Measurable, Attainable, Relevant, and Time-bound goals that lead to expanded duties and promotions.
  5. Keep It Flexible
    Reassure employees that it’s okay to adjust their career path over time to better align with their skills and interests.
  6. Offer Consistent Feedback
    Regularly review their progress, offer constructive feedback, and ask how they feel about their growth and workload.

Final Thoughts

Retaining quality employees by providing opportunities for advancement is a win-win for both your team and your business. Employees feel valued, motivated, and loyal—and your business benefits from experienced, engaged staff.

Take a moment to reflect on your current employee development efforts and ask yourself, “How can we improve our processes to better support and retain top talent?” Small, intentional steps now can lead to stronger, more capable teams in the future.

Income Comparison: Employee vs. Self-Employment

Many people think about starting their own business because they feel their current employer is making too much off their work. It’s a common thought, but it’s important to understand that the true cost of employing someone goes beyond just their salary.

Here’s the reality: your employer’s costs include Medicare and Social Security contributions, benefits, and other operational overhead. In fact, the direct costs of having an employee can be up to 47% more than their salary. This figure can vary based on things like family health insurance coverage and the benefits the employee uses. Plus, there are indirect costs like office space, furniture, equipment, and supplies.

Before you decide to leave your job and start your own business, it’s crucial to calculate your true cost to your employer. This way, you can avoid underpricing your services and working more for less. Let’s go through an example to see how this works:

Assumptions:

  • Your current annual salary is $62,000, which breaks down to about $29.81 per hour (based on the average US salary of $59,384 and an hourly wage of $29.81 at the end of 2023).
  • You receive 15 paid vacation days, 8 sick days, 4 personal days, and 8 paid holidays.
  • Your employer contributes $395 per month towards Social Security and Medicare, $800 per month towards health insurance, and $230 per month towards your retirement account.

Here’s how to calculate your true cost to your employer:

  1. Days Worked Per Year: If you work 52 weeks a year, minus your time off (15 vacation days + 8 sick days + 4 personal days + 8 holidays), you end up working 225 days.
  2. Direct Costs of Employing You: Combine your salary with your employer’s contributions: $62,000 + (($395 + $800 + $230) * 12) = $62,000 + $17,100 = $77,100.
  3. Average Cost Per Day Worked: $77,100 divided by 225 days = $342.67.
  4. Average Cost Per Hour Worked: $342.67 divided by 8 hours a day = $42.84.

To match your current net income of $29.81 per hour, you’d need to charge at least $42.84 per hour if you were self-employed. That’s a 44% increase over your current rate.

But remember, your employer has to cover additional costs beyond just your salary. They need to account for:

  • Office space rent
  • Support staff (like receptionists or HR)
  • Office equipment and maintenance
  • Office supplies
  • Business insurance, worker’s compensation, and unemployment insurance
  • Utilities
  • Communication expenses
  • Subscriptions
  • Business license and registration
  • Automobile expenses
  • Professional development

These overhead costs can vary depending on your industry and whether you’re working from home or renting office space. On average, overhead can range from $12,000 to $18,000 per employee per year. For simplicity, we’ll use $15,000.

Adding this to your direct costs: $77,100 (direct costs) + $15,000 (indirect costs) = $92,100. This breaks down to about $51.17 per hour.

When you’re self-employed, you only get paid for the hours you actually work, and you don’t get paid time off. You also have to handle all the administrative work yourself. So, to cover all these costs and still make a profit, you need to set your rates significantly higher than you did as an employee.

By running these numbers, you’ll get a clearer picture of the true cost of self-employment versus being an employee. It helps you understand what you need to charge to cover your expenses and make a profit if you decide to go solo.

If you have any questions or need further clarification on this topic, feel free to drop them in the comments below. I’d be happy to help out!