Hiring your first employee is a huge milestone—and for many San Diego business owners, it’s also a little terrifying 😅. You might be asking yourself:
- Can I actually afford this?
- Will this help me grow, or just add stress?
- What am I missing financially?
Before you post that job ad, it’s critical to make sure your numbers support the decision. As a San Diego bookkeeping and accounting firm, we see business owners hire too early (cash crunch) or too late (burnout and missed growth). This checklist will help you decide—confidently.
1. Your Revenue Is Consistent (Not Just “Good Lately”)
A strong month doesn’t mean you’re ready to hire.
Financial rule of thumb:
You should have at least 3–6 months of consistent revenue that comfortably covers:
- Your current operating expenses
- Your own pay
- The full cost of an employee
👉 If revenue fluctuates heavily, hiring may add risk instead of relief.
Bookkeeping tip: Review your monthly P&L, not just your bank balance. Cash in the bank without profitability is a trap.
2. You Know the True Cost of an Employee
An employee costs more than their hourly wage or salary.
Make sure you’ve budgeted for:
- Gross wages
- Employer payroll taxes (Social Security, Medicare, FUTA, CA ETT)
- Workers’ comp insurance
- Payroll software (Gusto, ADP, etc.)
- Benefits (if applicable)
- Training time & lost productivity at the start
💡 In California, total employee cost is often 15–30% more than base pay.
This is where clean bookkeeping and a proactive San Diego business accountant really matter.
3. Your Cash Flow Can Handle Payroll Stress
Payroll is non-negotiable. Clients paying late? Payroll still runs.
Ask yourself:
- Do I have a cash buffer of at least 2–3 months of payroll?
- Am I constantly floating expenses on credit cards?
- Do I rely on large, unpredictable client payments?
If cash flow is tight, hiring can turn a profitable business into a stressful one fast.
📊 A good bookkeeper will help you analyze cash flow trends, not just profit.
4. Your Books Are Clean (or Very Close)
This one’s big.
If your bookkeeping is behind or messy:
- You don’t know your real margins
- You can’t forecast payroll safely
- You’re guessing instead of deciding
Before hiring, make sure:
- Your books are up to date
- Payroll accounts are reconciled
- You understand your monthly break-even point
This is often the point where San Diego business owners bring in a professional bookkeeping firm—not after things get chaotic.
5. Hiring Will Free Revenue-Generating Time
Hiring just to “be busy” doesn’t pay off.
Your first employee should:
- Take low-value tasks off your plate
- Free you to sell, manage, or scale
- Directly or indirectly increase revenue
If you’re spending time on admin, invoicing, scheduling, or basic ops—those are prime first-hire tasks.
💡 If hiring doesn’t increase revenue capacity, delay it.
6. Your Pricing Supports Growth
If you can’t afford an employee without panic, pricing may be the real issue.
Ask:
- Are my margins strong enough?
- Have I raised prices in the last 12–24 months?
- Am I underpricing relative to the San Diego market?
Often, a small price adjustment + better financial visibility makes hiring feasible without stress.
7. You’ve Talked to a Professional (Before, Not After)
Hiring is both a financial and compliance decision—especially in California.
A qualified San Diego business accountant can help you:
- Stress-test payroll affordability
- Decide contractor vs employee
- Set up payroll correctly
- Avoid costly tax and labor mistakes
The goal isn’t just hiring—it’s hiring sustainably.
Final Thought: Hiring Should Reduce Stress, Not Create It
If your numbers are solid, your cash flow is predictable, and your books are clean—hiring your first employee can be a game changer.
If not, the answer might be:
- Fix the books
- Improve pricing
- Strengthen cash flow
- Then hire with confidence
Need Help Deciding?
At Accounting Fresh, we help San Diego business owners make smart, numbers-backed hiring decisions through clean bookkeeping, cash flow analysis, and proactive accounting.
If you’re wondering whether now is the right time to hire—or want a second opinion—reach out. Your future (and sanity) will thank you.