Hourly vs Salaried Employees: Which Is Better for Your Business?


Part of running a successful business is understanding the best way to compensate employees. To elaborate, many entrepreneurs are unaware of how salaried employees vs. hourly employees can impact their overall performance.

Fortunately, the answer is easier to understand than you might think.

Let’s explore everything that you need to know.

What’s a Salaried Employee?

When someone is compensated with a salary, they’re paid the same amount during each pay period regardless of the amount of work that they complete. The same can be said about the total number of hours they work.

For example, let’s assume that an employee has a monthly salary of $4000. You are obligated to pay them this amount regardless if they work 40 hours per week or 80 hours per week. Salaried employees are great for businesses that tend to have a high volume of work, as your employees will more than likely always be working full-time.

Offering a salary is also an enticing attribute that professionals look for when seeking a job. Salary positions are often seen as more dignified, and as a result, look better on a resume. So, keep this in mind if you’re having trouble hiring employees.

What’s an Hourly Employee?

As the name suggests, an hourly employee is compensated according to the number of hours they work. So, someone who is paid $10 an hour would be entitled to $400 for working a typical 40-hour week.

If your business has certain positions that only require a few hours of work per week, it makes more sense to hire an hourly employee for these obligations. Otherwise, you would be paying them a full salary even though they are working part-time.

Although hourly positions aren’t quite as revered as those that offer a salary, there are plenty of companies out there that offer competitive hourly wages. In the right field, your part-time hourly compensation could be more than somebody else’s salary in a different industry.

Salaried Employees vs. Hourly: Which Is Better?

The answer here depends on the needs of your business. If you have a high workload and have a large enough budget to offer your employees a competitive salary, this is typically the way to go.

In contrast, hiring hourly employees will likely be your best option if you don’t have enough full-time work. The same can be said about unskilled labor and entry positions.

Regardless of which option you choose, don’t forget to make check stubs and share with your employees. This will help ensure that all of your accounting information is kept in order.

It’s up to You!

It might seem like a difficult concept, but the above information will help you make a decision. From here, you’ll be able to ensure that you can discern whether hourly or salaried employees are best for your business.

Want to learn more info you should keep in mind? Be sure to explore what the rest of our blog has to offer.


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