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"The Cost of Employee Administration"

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Often the great unknown in calculating the real cost of Employee Administration is the money spent on non-productive time and costs. 

Here are a few of the costly factors.

  • Attend UC Hearings
  • Shop for Worker's Comp Insurance
  • Receive First Report of Injury
  • Prepare Notice of Injury Forms and File 
  • Notify WC Carrier of Claims
  • Obtain First Medical Report and File
  • Maintain Interim Medical Bills
  • Forward Medical Bills to Carrier
  • Prepare and File Final Reports On Injury
  • Prepare for Worker's Comp Audits 
  • Maintain COBRA Eligibility Records
  • Give Notice of Eligibility Records
  • Receive, Reconcile, and Remit COBRA Payments
  • Enroll Employee and Dependents In COBRA
  • Terminate COBRA Eligibility As Required
  • Shop for Health Insurance
  • Reconcile and Remit Medical Insurance Payments to Carrier
  • Shop for Dental, Life and Other Insurance Products
  • Reconcile and Remit Other Insurance Products
  • Comply With Immigration and Naturalization Act
  • Recruit and Train Employees Who Left for Better Benefits
  • Calculate Gross Pay (Regular and O.T.) 
  • Calculate Federal Withholding
  • Calculate and Deduct Payroll Taxes
  • Make Garnishment Deductions
  • Prepare Payroll Checks
  • Sign Payroll Checks 
  • Transfer Funds to Payroll Accounts
  • Issue Stop Payments On Lost Checks 
  • Replace Lost Checks 
  • Prepare Payroll check Registers
  • Prepare Deduction Registers
  • Calculate Employer OASDI Contributions
  • Calculate Employer Mcare Tax Contributions
  • Prepare Federal Tax Deposits
  • Complete Form 941 and File Electronically 
  • Complete Form 940 and File Electronically 
  • Prepare W-2s and Mail
  • Reconcile W-2s to 941s 
  • Prepare and Transmit W-3 
  • Reconcile Payroll Checks 
  • Answer Unemployment Claims

 

Don't forget...What you spend for your time, space, equipment, training and consultation also contribute to your costs.

It is difficult to precisely calculate your non-productive administration costs, but an accurate estimate is possible. This graph was compiled from data from the U.S. Chamber of Commerce, the U.S. Labor Department and the Small Business Administration.

Several comprehensive studies indicate 8.45% as a national average for small and mid-sized businesses.

Bear in mind that many managers tend to underestimate their employee administrative costs, often as a result of wishful thinking.
Number
of
Employees
Manual
Payroll
System
Automated
Payroll
System
1-9
10-12%
8-10%
10-49
8-10%
6-8%
50-199
7-9%
5-7%
200+
6-8%
4-6%
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