Can I Afford to Hire?

Let's lay the groundwork first,

The financial answer is our part. These two matter just as much, and they're the ones people skip.

Do you have a capacity problem (need more hands) or a process problem (need defined ways of working)?

Capacity problem

The work is clear. There just aren't enough hands to do it.

Process problem

Things fall through the cracks or get done differently every time.

Have you fully defined the role and determined what success looks like in 30, 60, 90 days?

Yes, it's written down

You've written it down, not just thought about it.

Not yet, I know I need help but haven't mapped it out

Common, and worth fixing before the job posting goes up.

Work on that first.

This step is crucial, and sorting it out first will save you both money and time before you spend either on a hire.

Let's define this role.

Not the job posting version. The how-this-role-actually-works-with-you version.

What are you hiring for? (just for your notes)

Will you control how, when, and where this work gets done?

Set hours, required methods, or an on-site schedule, not just the end result.

Yes, I'll direct the how, when, and where

No, they control their own methods and schedule

Will they use their own software and equipment and carry real financial risk?

Meaning they can profit or lose money on how they run the work, not just collect a guaranteed rate.

Yes, their own software and equipment and their own risk

No, I provide their software and equipment and pay is guaranteed

Is this a defined project for someone who also serves other clients?

Rather than an open-ended, exclusive relationship with no end date.

Yes, a defined project, other clients too

No, ongoing and exclusive to us

Employee or contractor?

We'll determine this from your three answers above, not a separate pick. Answer all three and it'll show up here.

Waiting on the answers above

This is a starting-point read based on the IRS's common-law factors, not a formal classification review or legal advice. Misclassifying a worker carries real penalties, so treat a close call here as a reason to get a professional opinion before you act on it.

What kind of role is this?

Bills hours (revenue-generating)

Able to bill directly, brings in revenue and provides billable client work.

Frees up your time (capacity-freeing)

Doesn't bill directly, but takes work off your plate so that you can generate billable hours and do higher-value work.

Keeps things running (overhead / admin)

Necessary, but doesn't generate revenue or free up billable time directly.

Your starting point.

Before we can answer "can you afford this," we need to know what "this" is being added to.

Have your P&L and balance sheet ready. We'll need a few numbers off of them along the way. Any file you upload is read right here in your browser. It's never sent to us or stored anywhere.

Where we've included typical estimates, use them as a guide. If you have more specific numbers for your business, use those instead. That only makes your answer better.

Average monthly revenue

A typical month, not your best or worst one. Upload a P&L with at least 6 months of activity and we'll calculate it for you, or just enter it yourself below if you'd rather not upload anything.

Upload a P&L (.xlsx or .pdf)

$

Average monthly fixed cost and overhead

Not including your own pay, and not including this potential hire. If you uploaded a P&L above, we've estimated this from Total Expenses, minus your draw if we could find it, but double-check it.

$

Monthly depreciation (optional)

Non-cash. If your books include depreciation in that expense number above, breaking it out here gives us a truer read on your actual margin. If you uploaded a P&L above, we've pulled this from a Depreciation line if the report had one, but double-check it.

$

Total Cash

If you upload a balance sheet below, this pulls in your total cash, not what you've already set aside for this hire's ramp-up. Adjust the number down to what you're actually comfortable earmarking across everyone you're hiring right now, not your whole bank balance, and make sure that amount is less than your total cash available. Upload your most recent balance sheet and we'll pull both your cash balance and your debt below, or just enter the numbers yourself.

Upload a balance sheet (.xlsx or .pdf)

$

Total Debt

Credit cards, lines of credit, and outstanding loans, added together. If you uploaded a balance sheet above, we've pulled this from your Total Credit Cards and Total Long-Term Liabilities (or individual loan and line-of-credit lines if those subtotals weren't there), but double-check it.

$

Your own current monthly draw or pay from the business

If you pay yourself through payroll, that's most likely $0 here, since it's already sitting in your fixed monthly expenses above. If you pay yourself through an owner's draw instead, enter that monthly amount.

$

Fix the margin first.

This one comes before the hiring question, not alongside it.

What it actually costs.

Pay is only part of the number. This adds in what actually shows up on your books.

We've included typical estimates on each line as a guide. If you have more specific costs for your business, use those instead. That only makes your answer better.

Monthly salary you're considering

$

We'll add 7.65% on top for employer payroll tax (FICA), a $100/month payroll provider to run it, then add in benefits, workers comp, and liability below. That's the part that doesn't show up in the offer letter but shows up in your bank account every month.

Check the box if you will offer benefits for this role

State unemployment tax (SUTA) (optional)

What this hire adds to your state unemployment insurance, per month. $20-75/month is a common range for a single hire, though it can run higher in a few high-wage-base states or if your rate is elevated. Check your state's rate notice or ask your payroll provider for your exact rate.

$

Workers comp (optional)

What this hire adds to your workers comp premium, per month.

$

Professional liability increase (optional)

If adding this role bumps your liability insurance, the monthly difference.

$

Software subscriptions (optional)

Tools or software this role needs access to, ongoing monthly cost. Applies whether it's an employee or contractor.

$

Fully loaded monthly cost will show up here as you type.

This doesn't include the cost of your own time and effort spent defining this role, recruiting for it, and training whoever fills it. That's real too, it's just not a number this calculator can put a dollar figure on for you.

Recruitment costs to fill this role (optional)

Job placement or posting fees, recruiter costs, background checks, a finder's fee, a referral fee. One-time, not monthly.

$

Anything else to get this hire set up? (optional)

Equipment, and if this is your first hire, getting a payroll provider in place. One-time, not monthly.

$

Your answer is ready.

You've done the hard part. Subscribe to the Life on the Books newsletter and we'll show you where you stand. You can unsubscribe anytime.

First name

Email address

Yes, subscribe me to the Life on the Books newsletter