Companion to "The loaded cost."
The worked example from the lesson (a $22/hr employee, 20 hrs/week) is printed per line for shape; verified 2026 federal lines carry their sources. SUTA and workers comp are yours to call for.
| Line | Worked example ($22/hr, 20 hrs/wk) | Yours ($ / hr) |
|---|---|---|
| Wage | $22.00 | $ |
| Employer FICA 7.65% (SS 6.2% up to $184,500 in 2026 + Medicare 1.45%, no cap; no threshold, no first-year exemption) | $1.68 | $ |
| FUTA 0.6% effective (6% on first $7,000, credit up to 5.4% against state taxes; about $42 per employee per year) | about $0.04 | $ |
| SUTA: your state's new-employer rate on its wage base (call your state unemployment agency: what is the rate, on what base) | $300/yr example = about $0.29 | $ |
| Workers comp: state and job class (agent quotes it in minutes; office help cheap, roofers not) | 8% example class = $1.76 | $ |
| Payroll software (Gusto lists a contractor-only plan at $35/mo + $6 per contractor; W-2 plans cost more. Cheapest line in the stack) | smallest line | $ / mo |
| Management hours: 3 to 5 hours a week of your time in the first ninety days, at your rate | counted in the $26 below | $ |
| Loaded hour, before management time | about $25.70, call it $26 with it | $ |
Carry rules: first hire without benefits, about 1.15 to 1.2 times the wage; with benefits and paid time off, 1.3 to 1.4. BLS puts benefits at 30.1 percent of total compensation for private industry workers.
| Monthly cost at the worked example's 20-hour week | about $2,200 to $2,300 |
| Planning multiplier 1.25 for spillage, tools, and the things you will forget | Example budgets about $2,800 / mo |
| Your monthly budget line | $ |
The carry test: multiply your monthly budget line by six. For our example that is roughly sixteen to seventeen thousand dollars. If losing that money over six slow months would break you or force a panic firing, you are not ready to hire. Six months of carry is the floor, not the ceiling, because the worst month to own payroll is the same month your own revenue dips.
| Your carry number (monthly line × 6) | $ |
| Where the carry money sits (account, named) | |
| Pass: losing it over six slow months would not break you or force a panic firing | ☐ Pass ☐ Fail |
A contractor at $35 and an employee at $25 loaded are not $35 versus $25; they are close to $35 versus $26, plus different obligations, control, and risk. Cost is not what decides employee versus contractor; the working relationship decides, and the law grades it.
| Contractor rate quoted | $ / hr |
| Your loaded employee hour (above) | $ / hr |