First Employee Cost Calculator
True cost of your first W-2 hire including FICA, SUI, workers comp, benefits, equipment, and payroll service.
FAQ
What's SUI and FUTA?
State Unemployment Insurance (SUI) and Federal Unemployment Tax (FUTA). Both are paid by the employer. Rates and wage bases vary by state. FUTA is 6% on first $7k, reduced to 0.6% with the SUI credit.
What about workers comp?
Workers Compensation insurance is required in most states for W-2 employees. Rates vary by industry (office work ~0.3% of payroll, construction 5-10%+) and state.
Should I use a PEO or just payroll service?
PEO (Professional Employer Organization) handles HR, benefits, compliance — can be cost-effective for small employers but limits flexibility. Payroll service (Gusto, ADP RUN, etc.) is cheaper and adequate for most small businesses with simple needs.
What about contractors instead?
See our Contractor vs Employee Cost calculator. Cheaper on paper but misclassification risk is real — penalties can dwarf the savings.
Disclaimer. Estimates only. Workers comp rates vary widely. State registration, tax setup, and employment law compliance is required. Consult a CPA and possibly an employment attorney before hiring your first employee.