Compensation

When determining wages, keep in mind any non-wage employee benefits costs such as company insurance plans, paid sick days, vacation days, and so on. Using a total compensation view, you'll be able to keep wages in clearer perspective.

Will you offset lower wages with employee health insurance?
Will you pay higher dollar wages with only a modest insurance package?
Will you pay only the minimum wage with no insurance benefits at all?

Some key points to remember about compensation:

Your base wage levels really depend on your ability to pay. No matter what the wage surveys indicate, you can't pay out money you don't have.
Don't forget that you must match the employee's social security withholding tax with your own contribution when calculating payroll costs.
Insist they get your approval before putting in overtime. Keep accurate time records for each employee.
Overtime costs add up fast, so keep close track of the hours your people are working.
Ensure you have enough cash to meet quarterly payroll tax deposits. If cash flow is tight, pay these taxes even if it means being behind in your rent.
Employees in most small businesses are in the nonexempt category, so they are eligible for overtime pay. Wrestling with exempt/nonexempt status should not be a major problem. If you do have a worker who is on the borderline between these two classifications and you�re not sure which status to designate, take the safe route and pay overtime, at least until you can clear things up.