Once you start hiring employees to do the installation work, your overhead figures will change. Your office overhead will change due to the time spent processing payroll and its related activities, and you will now have labor overhead to figure into your bid.

Labor overhead is the cost of paying the employees for their work. You will have workers compensation insurance, state paperwork, additional IRS forms, office paperwork pertaining to payroll, (etc.). These labor expenses will have to be added in as they become applicable.

Now that you're hiring employees to do the installation work, you won't be paying yourself to do the installation but rather your employees. Because of that now you'll have to add an expense to your office overhead to pay you your wages and still earn the planned profit on the job.

If you look at the profit as your wages then you might as well go to work for someone else because technically you are working for wages when you do not collect a profit on the job.

Yes paying yourself will raise your overhead but there comes a time when you have to spend a little more if you want to expand. If you don't pay yourself to do the bid work, how can you afford to live?

You would have to work out in the field (for yourself) so that you could pocket some of the labor money but if you are working out in the field every day you won't have time to do bid work to win more jobs!

Do you know how to do payroll?

Payroll entails a lot more than just giving a paycheck to your employee(s). You've got lots of calculations to make; hours times wages, wages times taxes, etc. You've got to know when your payroll taxes are due (sometimes every month) and you've got to get the correct tax forms filled in and mailed, along with the proper payment, to the appropriate tax authorities.

It's very time consuming and so vulnerable to errors. The application QuickBooks by Intuit has a payroll feature but unless you already possess accountant type knowledge then the payroll feature is somewhat difficult to set up. You could do it on your own but that's definitely not something I would recommend.

This leaves you with the option of the various payroll services that are out there. There's several different types of set ups. You've got the temp agencies where the agency has a pool of candidates that you must choose from. While this keeps you from having to do payroll (the agency pays the employees and then bills you) it is a rather costly way to avoid doing payroll yourself.

There are payroll service companies that do your entire payroll and send you your paychecks, and you manage the taxes; payroll service companies that do your entire payroll for you, send you paychecks and they manage the taxes; companies that have online payroll systems where you print your paychecks on your own printer (or have them direct deposited); and so on...

Payroll Leasing Agencies

There are payroll leasing companies who would be happy to run your entire payroll for you. Some are very expensive and some are very reasonable. When the fee is reasonable it's nothing when you compare it to the fact that the payroll leasing company takes on all responsibilities involved with payroll and employment (payroll taxes, unemployment claims, literally everything that goes along with payroll).

We have used a California based payroll leasing company for many years now, and have never had a problem. We pay them a minimal fee, and when it's time to file our taxes, we write it all off the same way we do our material purchases! :)

When using a payroll leasing agency, you are not an employer so you are not required to purchase worker's compensation insurance, pay the employment taxes or deal with the employment tax paperwork, or meet any employee related governmental requirements and reporting, etc., because the payroll leasing firm handles all of it.

The person you hire works for you but is employed by the payroll firm. The payroll leasing agency usually does not have a pool of employees to pick from. You find our own people, and then add them to the payroll leasing agencie's payroll. You pay what you want to pay to the employees, there are no restrictions (other than they must be paid at least minimum wage...).

You send weekly time cards to the agency (hourly wage information) along with a check that covers the payroll and related expenses (the workers comp., etc. that the payroll firm pays) and the payroll agency sends you the paychecks to hand out to the employees.

Now, although these employees are not legally yours, it is still your responsibility to see that they get paid when they should. Should the company you are using not send the paychecks one week and either split town or go belly-up, you will need to make sure those employees get paid, even if you have already sent your payroll to the payroll company.

This could mean that you pay out double payroll, once to the payroll firm and once to your employees! Chances are pretty slim that this will happen, but always remember that if you do not keep a good grip on your company and it's goings-on, you could end up in a tight spot.

Payroll can be extremely time consuming as well as confusing, and if you make a mistake you have to answer to various governmental agencies. If the payroll leasing company makes the mistakes, they have to do the answering, not you.

Payroll Service Companies

Should you wish to keep your employees and manage the payroll related exercises and expenses yourself, then take a look at the various payroll management service companies out there, which operate differently than payroll leasing agencies.

The easiest to use payroll management service companies will have an online payroll system where you can literally get your payroll done in 5 minutes. Once you've got it set up, all you do is enter the employee's name and amount of hours worked, and instantly you can print payroll checks!

The system usually allows you to print out completely filled in payroll tax forms, sign and mail them to the tax people (and/or you can take advantage of Electronic Tax Payment functions, also included for free! Often times if the payroll management company makes a mistake in the numbers, they'll pay your penalties and interest (but check with them to make sure). They also often have direct deposit included for free.