The Real Cost of Hiring Your First Employee

Hiring Employee

Taking on your first employee is an exciting time for any business. When you are finally successful enough to start growing, you’ll probably be eager to get started. But before you rush into anything, you need to consider the costs. Naturally, you already realize that you have to pay them a salary, and you have crunched the numbers to make sure you can afford it. However, that’s not the only cost involved with hiring somebody. You need to add up all of the other associated expenses first to make sure that you can realistically afford this. Here is the true cost of hiring your first employee.

Recruitment Costs

Before you even bring a new employee on board, you need to find the perfect candidate. Have you considered the cost of recruitment? You have to pay to advertise the position so you can get applications. Then, you’ll need to take time to go through all of the applications and conduct the interviews. If you go through a recruitment agency, they can handle a lot of the hard work for you, but they’ll ask for a percentage of the employee’s first year salary as payment. This can be as much as 20%, which is a lot of money.

You can save a bit of money by advertising the position yourself through social media platforms like LinkedIn. But be aware that you may miss out on some of the best talent this way.

Office Space and Equipment

Next, you need to set up an office space for them. If you’re currently working out of your house, are you going to hire an office? That’s a big added expense to consider. You then have to kit them out with a desk and a computer, etc. Even though you can find affordable deals from companies like Lenovo, it’s still an expense that you have to consider. Then you’ve got all of the licenses for software, stationery, furniture, and anything else that your employees need on a daily basis. All of this quickly adds up, and if you are not careful, it will soon put a strain on your finances. Make sure that you write a comprehensive list of everything that your new employee is likely to need and calculate the costs so that you have a more accurate picture of your finances.


Having the right insurance in place is absolutely vital if you want to protect your business. When you hire employees, your insurance needs change, and the costs increase. You will need liability insurance that covers employees working in the building. If you are moving into an office for the first time, you’ll need insurance to cover against theft or damage. The monthly premiums will be significantly higher than they were in the past, and you need to factor this cost into your calculations.

Hiring your first employee is always a risky move. If you do it too early and you don’t consider the full cost of it, you could end up in serious trouble. So, before you do anything, make sure that you are sure you can actually afford it.

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