The True Cost to Hire an Employee in California

the TRUE COST TO HIRE AN EMPLOYEE IN CALIFORNIA Employers are required to pay taxes on the wages your employee earns. Some taxes are the sole responsibility of the employer, while others are split with the employee. Rates vary based on the employee's earnings. Chalk it up to the cost of doing business in California, but it's important to understand the true cost before making your next hire. EMPLOYEE WAGE + EMPLOYER TAXES TRUE COST TO HIRE meet seasonal entry-level manager SAM EMILY MIKE A new entrant to the A college student who returned home for the summer to work at a local coffee shop in San Francisco. He earns minimum wage working full time for 3 months. workforce, she'll be the new office manager for an local insurance agency in San Diego. She earns $50,000 per year. A seasoned technology veteran, he's moving to Sacramento to be closer to his family. Joining a small tech consulting firm he'll earn $150,000 per year. Salary $150,000 Employer Taxes + $9,553 $150,000 Total Cost to Hire $159,553 Salary $50,000 Employer Taxes + $4,154 $100,000 Total Cost to Hire Wages $5,064 $54,154 Salary Employer Taxes + $625 $50,000 Total Cost to Hire $5,689 Salary $5,064 Wages So, break it down for me. What taxes do I have to pay as an employer? Social Security 6.2% of taxable wages up to $113,700 Medicare 1.45% of taxable wages up to $200,000, 2.35% of taxable wages above $200,000 California Unemployment 1.5% - 6.2% of taxable wages up to $7,000 Rederal Unemployment 1.2% of taxable wages up to $7,000 Employment Training Tax 0.1% of taxable wages up to $7,000 zenpayroll For additional resources visit: ZenPayroll is modern, delightful payroll software that enables businesses to run payroll in minutes, from any web enabled device. All government payroll taxes, reporting, and compliance are taken care of automatically and paperlessly. www.SSA.gov www.EDD.ca.gov www.DOL.gov www.ZenPayroll.com