When you hire an employee in a traditional relationship, you are committed to more than the base amount salary the employee receives. You must pay employee taxes, overhead for space and equipment as well as supplies, benefits and pay for time not worked, such as during vacations, holidays and sick time--even breaks and lunches. If you experience high turnover in the position, you will also realize considerable cost in recruiting, hiring, training, record maintenance and even severance pay. Your costs would break down something like this:
Employee Costs
Full-Time
Part-Time (20 hr/wk)
Base salary (approximately $14.75/hour)
$30,000
$15,000
Benefits (15% of salary)
4,500
2,250
Payment for time not worked (13%)
3,900
1,950
Payroll Taxes (12%)*
3,600
1,800
Administrative Costs (7%)**
2,100
1,350
Equipment/Equipment Maintenance/Supplies
3,900
3,900
Rent of space for in-house employee
2,250
2,250
Annual Total
$50,250
$28,500
*Source: U.S. Chamber of Commerce
**These costs assume a stable staffing situation. High turnover can double administrative costs annually.
However, if you hire a VA at an average rate of $45/hour, for an average of 20 hours a month, you avoid the expenses required to house and supply an employee. At tax time, your VA is paid under 1099Misc, so filing is simple and you never have to open human resource files. You get an experienced, high-quality assistant; plus, you get to keep your private space private! Costs for the VA would break down something like this:
Hourly Rate
With Retainer Discount*
20 hrs/mo @ $45/hr Hourly or $40/hr Retainer Rate
$ 10,800
$ 9,600
Benefits
$ 0
$ 0
Payment for Time Not Worked
$ 0
$ 0
Payroll Taxes
$ 0
$ 0
Administrative Costs
$ 0
$ 0
Equipment/Equipment Maintenance/Supplies**
$ 0
$ 0
Rental of space for in-house work
$ 0
$ 0
Annual Total
$ 10,800
$ 9,600
*Discount given for agreement to pay for designated number of hours up front each month instead of hourly account at the end of the month. It is the responsibility of the client to request enough work to equal the designated hourly amount. Any work requested by client over the designated number of hours per month would be billed at the end of the month at the discounted hourly rate. It is the responsibiity of the VA to keep the client informed of the number of hours worked throughout the month. Overtime must be authorized by the client. A retainer client cannot carry over unused time to credit the next month.
** Some supply and usage costs will be charged to the client. Such expenses are rare and incurred only at the direct request of the client and may include long distance phone charges, large number of copies printed by VA, postage charges for mailings, etc.
