How Much Does a Small Business Employee Really Cost?

When founders model headcount, they almost always model the salary. The real number is 25–40% higher. Here's the line-by-line breakdown of where the rest goes — and how to decide whether a hire is the right move at all.

The cost multiplier

For a typical US full-time employee, the all-in cost lands between 1.25× and 1.4× of base salary. A $75,000 hire costs ~$100,000. A $150,000 hire costs ~$200,000.

What's in the multiplier

• Payroll taxes — Employer-side FICA (7.65%), FUTA, and SUTA bring this to ~8–10%.
• Benefits — Health insurance contributions ($6–12k/yr), 401(k) match, PTO accrual.
• Equipment & software — Laptop, monitors, SaaS seats. Easy $3–5k year one, $1–2k after.
• Workspace — Office rent ÷ headcount, or a remote stipend.
• Onboarding — Recruiter fees, ramp-time lost productivity, training.

Hire vs contractor vs software

Before any headcount approval, run three numbers: full-time loaded cost, fractional/contractor cost, and "buy a tool that automates the job." The right answer is rarely obvious without the comparison.

Use the calculator

Plug your real numbers into the Employee Cost Calculator for an exact figure for the role you're about to open.