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Paying Employees: How to Determine Their Salary

You want to give your employees a fair salary, but you also need to keep your business afloat. How much should you be paying employees? Read on to find out.

If you’re a small business owner, you know how important it is to save money whenever you can.

But you also have to pay your employees well.

In fact, you should always pay your employees in the upper half of the wage range. Though this may not save you any money right away, it will in the long run.

By paying employees a little more than average, you’ll be able to hire people who are more dedicated and excited about the position. These kinds of people typically work a lot better than others, and you’ll have a good atmosphere in the office.

Every position in your business affects your overall success, so getting people that like their work, do it well, and plan to stick around is important.

So let’s look at this quick guide that’ll help you figure out how much to pay your employees.

Write Your Job Description

You can’t know what to pay an employee if you don’t know what you’re paying them for. Your first step should be writing out the specific requirements and description of your open position.

Try to keep this description pretty close to industry standards as you can. Your job position should be unique to your business, but if you can’t match it up with other positions in other businesses, you’ll have a hard time finding a good salary to pay your employees.

If you already have a lot of employees, you may also want to invest in a check stub maker to take some of the extra paying work off your mind.

Search for Salaries

Once you know what your job position is, you can start searching around for an appropriate salary. This may take some time and patience, but it’s not all that hard.

Large businesses hire compensation consulting firms to find and set good salaries, but those cost money. Remember, you want to save as much money as you can, especially if this is one of your first hires.

Here are a few ways to find good salaries on your own.

Look at Similar Job Descriptions

This means hiring website online or job classifieds in the newspaper. Find a job that’s similar to yours and see what they’re starting salary is.

You may not be able to find one that is exactly the same as your position, but this will help you get a rough idea. If your position requires more work or less work, you can adjust the salary accordingly.


You can talk to other small businesses similar to yours, your Chamber of Commerce, or employment agencies to find a good price point.

If you get a little creative, you may even be able to ask your competitors what they pay their employees (though you may want to stick to your other options first).

Search Public Sources

You can find things like Occupational Compensation Surveys at the Bureau of Labor Statistics. These have information about specific jobs in specific locations, and you can use them to find how much other people are paying for a similar job position.

Paying Employees Right

However much you decide to pay your employees, make sure it complies with wage and hour law. Paying employees in the upper half of the wage range is usually a better choice, and if you can’t afford to pay an employee what they deserve, you may want to hold off on hiring for now.

Need help getting ready for your hire? Check out some of our resources.