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With the U.S. unemployment rate falling to a low of 5.7 percent in January, the economic forecast through 2015 remains optimistic, even though the energy sector is experiencing some difficulty due to the falling price of oil. Although some business owners are uncertain about the economy, many have decided to bring new staff on board to take advantage of the economic upswing. The talent pool is unusually rich in some areas, but very tight in others – especially in accounting and finance.
How do you know if it’s time to hire? Consider your business’s current productivity and revenue, as well as projected growth. The professionals at Doeren Mayhew’s recruiting and staffing affiliate, DoerenSource, offer three factors to consider.
Whether you’re thinking about adding your first or 50th employee, hiring is an important decision with long-term consequences. As many business owners learned in recent years, laying off good, loyal employees can be heartbreaking and dangerous for your business. So, before you add more people to the payroll, make sure you have the resources to pay those already contributing.
Employees cost more than an annual paycheck; benefits, payroll taxes and workers’ compensation insurance typically add another 20 percent to the total. Keep in mind, however, that tax incentives may reduce your hiring costs. For example, if you hire a military veteran who’s been unemployed for more than six months, you may be eligible for a Work Opportunity credit as high as $5,600 – and up to $9,600 for hiring qualified “wounded warriors” – assuming legislature is extended once again for 2015.
You may also want to perform a cost-benefit analysis. For example, if you’re picking up the slack by performing administrative and bookkeeping tasks yourself, you may have little time left over to manage customer relationships and solicit new business. Consider the cost of lost growth opportunities vs. the cost of hiring a new employee.
Also consider your business’s near-term future – say, six months to a year out. Depending on the industry and position, it can take several months to find qualified candidates – not to mention the fact that, if you drag your feet, your forward-looking competitors may beat you to the best talent.
Leading economic indicators such as retail sales and durable goods orders, as well as sector-specific measures, can help guide your growth and productivity projections. But it may be necessary to take a leap of faith and hire new workers before you’re certain you have enough work to keep them busy.
One option for gun-shy owners is to hire temporary staff or contractors. If you’re wary of adding an employee to your payroll, recruiting firms such as DoerenSource can be an excellent source for contractors and temporary staff – particularly administrative, accounting and finance professionals. Using such resources can also help avoid potential IRS issues, such as how the IRS defines employees vs. contractors.
Deciding to hire is a tough call in an uncertain economy. But if you’ve been short-staffed for a while and your revenue picture is finally improving, it’s time to start considering it.
DoerenSource offers comprehensive recruitment and staffing solutions across a wide variety of industries and positions. If you have immediate needs or simply want to plan for the future, contact Mack Lytle at 713.789.7077.
This publication is distributed for informational purposes only, with the understanding that Doeren Mayhew is not rendering legal, accounting, or other professional opinions on specific facts for matters, and, accordingly, assumes no liability whatsoever in connection with its use. Should the reader have any questions regarding any of the news articles, it is recommended that a Doeren Mayhew representative be contacted.
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