[jwholden]

I know we discussed this in another thread, but I couldn't find it...

During my vacation last week I found a payroll service who will be taking care of my payroll from here on in. WHAT A RELIEF AND GOD BLESS THEM!!! I am looking forward to not having to deal with that crap anymore.

On a similar note, when you add all the employer and employee taxes and take them out of your checking account all at once WOW DOES IT ADD UP!!! I have been doing payroll myself since day one, but never quite grasped what weekly pay ends up costing by the time all is said and done.

BTW, bi-weeklY is around 25 a week for 1-3 guys, weekly is around 17 a week for 1-3 guys. Not having to deal with quarterlies, W-2's, and monthly payroll deposits...PRICELESS!

[Nebraska]

Understand your situation....

I have mine down fairly good. It costs me exactly 19% above payroll for the employers portion of FICA, FUTA, SUTA, and Worker's Comp. For instance $10 per hour employee actually costs me $11.90 per hour. Each year as the SUTA and Worker's Comp changes so does that % figure.
I do payroll on a weekly basis and set aside this $ into a separate savings account. What irritates me to no end is the knowledge of other businesses paying their employees cash.

Are you using someone local for the payroll?

[jwholden]

A local branch of a bigger company. Got the name from a friend of my wife who only has two employees and has been using them.

I have to pay all taxes and fees with each payroll. I'm used to writing paycheck one week and then making a monthly deposit and filing some quarterlies for the rest. Not used to seeing it all at once.

Do you think that company invests the money until they need to pay the taxes? I'm going with a solid yes!

[cutntrim]

Oh, I'm sure they invest it. Wouldn't you? I finally decided to sign up with a payroll service earlier this year after doing it myself for 10yrs. I've got 3-4 employees and average about $2800 every two weeks for paydays. That's with all tax remittances and vacation pay accrued. It costs me around $30/pay for the service plus an annual fee. The only thing not included is Workers Compensation which I still have to pay seperately in quarterly installments.

Having said all that, I may consider taking over payroll once again when I'm more comfortable with that feature in Quickbooks... we'll see.

[site]

I tried a payroll service my first year in business. It was expensive and impersonal. The next year I hired a part time bookeeper as a subcontractor. She does payroll, deals with all quarterly taxes, gets yearly tax info ready for the accountant, reconciles and pays all the bills. balances the checkbook (which is pretty easy in quickbooks), and more. She knows more about my finantial situation on a daily basis than I do (Luckily she is trustworthy) She costs me about $70 a week. Not bad considering that it would take me 4-6 hours a week to do all that myself. Ionly see her about once every two months. We do 90% of our business through the mail and e-mail.

[Bill Schwab]

We have a 33% labor burden WHICH SUCKS! At the advice of our busines banker, we went with Paychex through our bank for one main reason, although there are many others......
For the $25 or so a week it costs us for them to process checks, they assume all liabilities if they screw up on sending the right amount of Nazi fees to the feds. That $1,200.00 a year is simple insurance. They also came to the shop and did a presentation in English and Spanish on the importance of opening a checking account and saving in the bank rather than the cookie jar.

Since then, all but one has opted to go with direct deposit, which saves a trip to the job with payroll. Two have gotten car loans, and one of those two has begun to build his credit. My wife is working with him to get him qualified to buy a small house or even a mobile home so he can build HIS equity rather than pay for someone elses.

Once a few of the guys see how many doors open by doing things they way we do them in America rather than the old world ways of thier country, they just dig in and want to learn that much more, which trickles down to the company, integrity, quality, etc etc.

All from a simple payroll company! Now if I can succeed in grafting that wad of $20 bills to that apple tree, we can have the patent on the first money tree in the world!

[Dale Wiley]

My payroll is still fairly small. About 5 to 6 K per month.

I do it with a program and do a transfer of all taxes to a money market account until due.

Too cheap to do otherwise I guess..

[John T]

I have looked into payroll companies before. Just a quick point- I looked at Quickbooks payroll service but they did not handle the taxes due to local municipalities! What's the point of using them if I still have to handle local payroll taxes myself? And to add to it, the local taxes were calculated on the same form as the state. If you hire a payroll service just make sure ALL your taxes are handled by them.

[jwholden]

I have been using QB do it yourself payroll. Somewhere between 150 and 200 a year for all of the neccesary software and updates for new taxes. I would manually add the rate for items such as state unemployment. I have no problem doing payroll myself, except that once the quarter ends I have to relearn which forms go where, when each tax is due, yadda, yadda, yadda.

The company I hired tells me that I don't have to pay the weekly charges to process payroll if I don't have one (winter). They will file a zero return for me in the winter as well, for a nominal fee.

As my company 'evolves' I am seeking ways to make my life easier. I'm hoping I found one.

I love the idea of an office assistant. However, I can't justify hiring someone to do the job for me...yet.

Imagine a live voice to return calls, call a couple weeks after completeing a job to see if there are any questions, call a day or two before a job starts to say we're coming, call a week or two after presenting an estimate to see if there are any questions. Call suppliers to check and double check orders. Pay the monthly bills. Those little things make a BIG difference.

[justgardens]

I hated the paperwork and agonized over making sure quarterlies were sent in on time. I went with an account ( I do his home and office) who has one person who handles my business. They do EVERYTHING. Quarterlies, payroll, checkbook balancing, any taxes, Workmans Comp, even the weekly letters to pay child support ( one guy of mine has 3 different children to pay for in two states), complete year end for my business, personal yearly fed and state taxes and my employees w-2's ready to go with only a stamp needed. I weekly fax over my employee hours and credit card statements. All is done by email, fax or phone if needed.They get my business account checking statement sent directly to them. Any questions from Uncle Sam they handle. I feel so much better about running my business now and don't get stressed out on April 15th because I am done ahead of time without having to go through stacks of papers anymore. I'm in my third year working this way. It is working out well. The one woman who takes care of my business knows my whole life but they are a trust worthy firm and I then can do what I do best...play with plants. I pay $3K for all this service which seems pretty good with what I have read on this thread. I do have to actually write out the check to my employees each week after receiving the detailed stub for their records. I don't mind that.

[jwholden]

With my recent focus on estimating I have become more interested in labor burden. I calculate my labor burden to be

FUTA .8
SUTA 1.5
SOCIAL SECURITY 6.2
MEDICARE 1.45
LIABILITY 3.9
WORKMANS COMP 5.47

TOTAL 19.32%

So if my average wage is 14.67 per hour (I'm paying myself a foreman's wage in this average) it costs me 17.50 per hour per guy standing at the gas station in the morning eating his breakfast.

Next we need to add overhead to this number...

[Dale Wiley]

All these labor burden numbers seem real accurate. Mine is about 22% of payroll, due to the higher insurance rates here.

To get your overhead per hour, take all your overhead costs and divide by the total number of FIELD PRODUCTION HOURS your comapny will pay for. Owners salary should be in overhead as a line item.

Our average wage is $ 14.56 per hour.
6330 hours divided by $ 109,557.

Our overhead is $ 17.97 per hour.
6330 hours divided by $ 113,725.

Total cost per hour is $ 32.53 per hour.

20% net profit is about max in this saturated market, so we are getting about $ 39.00 per hour.

We got away from our very tight operations system because of an employee issue, 1( 1 employee ) that caused us substantial efficeny loss and production compromise. This really started to bite us in the about 2 months ago, and is going to take a bit to recover from.

As a result, we are reindexing our operations process, and strictly running our copyrighted system and get some profit back in to this bad boy. Even at that $ 39.00 per hour and 20% net, efficent operations can increase that net by another 15% without increasing costs... IF, IF , IF, field and support operations are closley monitored , controlled and you have employee buy in through profit sharing.

[jwholden]

Dale,

I'm impressed with the way you PLAN for your year! I plan for the year ahead, but the more years in business the more I realize more planning is better than less.

Where did you learn your system?

[Dale Wiley]

My system is a combination of several different things.

I was tired of hearing everyone say they charge X dollars per hour because, that's what every one else is charging. I did not do very well in this business until I got a GOOD grip on the numbers side of things and that took about 5 years of night school to get that AA in Business Administration. Things started coming together after that.

In 2001, I was determined to come up with a solid, scripited operations system for landscape business's. I read a short piece in a trade magazine about a guy who had developed an operations system and was bringing it to the landscape market. I called him and over the next few months we spent a lot of time on the phone and he invited me to come look at his business. So I made a cross country trip, went to a presentation, saw this guys business and he invited me to join the operation as a trainer / consultant.

I brought my financial expertise and melded it with his operational excellence, and together with a couple other individuals, we developed and perfected his system that has helped hundreds of contractors around the country. Some of the major premisis that this system uses are:

1. Every hour you purchase from an employee MUST be resold to clients.

2. Efficencies MUST be monitored and controlled on a daily basis.

3. Effective Human Resources program and employee training are a MUST for this or any system to work.

4. Overtime is a profit killer with out exception and easily proveable.

5. Return on labor is all we have to make profit on in this business. If you make money on labor, charge some level of markup on materials, (but not counting on it for revenue stream), and effectively control labor and you will make money.

6. Set one overall labor rate for your company, incoporate equipment and other costs into overhead, and use a basic cost averaging type of price level setting.

7. Knowing your EXACT direct and overhead costs per hour allows you to add profit as you see fit, (no less than 8% for sustainability in the business), and makes you discipline yourslef to not EVER work for less than your set net profit and to protect it at all costs.

6. Set a target amount of hours you need to sell, and sell to that and no more, unless you have it carefully planned and budgeted for.


on and on and on... there are many guidelines. There are many companys out there that have benifited from this, some in the millions of dollars that we turned around in 18 months. This system has worked for me and others, but the main thing I stress is that you need a SYSTEM, whether it is one like this or some other one.

Structure is very important to a functioning business, and the tendency of the left brain artist, creator person in this business is to hope that the numbers follow the creativity. It very seldom happens.

I deviated from some of my own operations procedures this year and it impacted my business in a negative way. I got away from my human resources program, and this effected every other part of the system. What you will find in ANY system, is that it is very interdependent upon other parts of the system, and the failure of one part, can generally be over come, but failure of one, not dealt with, leads to another failure and another, and pretty soon you have a major problem.

The employee problem hurt efficency and support operations, other employee's saw the problems and created their own. I became too focused on the employee problem and allowed the efficency monitoring and job control, sales and estimaiting to suffer and as a result we hit a pretty big wall real hard in mid August.

We are on our way out of the hole, but it certainley is going to set us back at least a year or more. I am returning to the field on a part time basis, I have my operations manual out and going into a TOTAL REVIEW of the operations and getting us back on track.

Planning is very important and planning carefully got us to where we were in the first part of the season. I have carefully planned out our nursery operations, which is following close to plan at this time, and I am pleased at this point with that. I fully expect to sell or liquidate the landscape business in 3 to 5 years and go strictly nursery. That is what we will plan for , and what I expect to see.

By the way, this employee problem was also a family member, so my judgement was clouded by that and kept me from dealing with the problem as fast as I should. NEVER, NEVER, NEVER, hire family and expect suitable performance, or a level of honesy.

[Mac]

Dale, was this Compass, or part of it?