keep some employees on a fixed weekly or monthly work schedule regardless of how business fluctuates. Many businesses call in some temporary employees as needed. All such wages are a fixed expense. To fill out line 4a, youll need to know how many people youll hire, how many hours per month each will work and how much youll pay each person. If you plan to pay yourself a regular wage, regardless of how profitable the business is, include your salary as well.     Fill in the gross amount, before employee withholding deductions, you will pay every month for wages and salaries. (If you dont know, or arent sure how this works, turn to for a complete discussion.)     WarningCertain wages arent fixed expenses. Some small manufacturing businesses pay workers on a piece-rate basis or hire employees when orders are high and lay them off when business is slow. Others dont pay a salary at all, but compensate workers with a commission for each sale. In all of these situations, the portion of the wages that changes with each additional unit of production should be considered a variable cost of sale. Those costs belong in the cost of sales category and not the fixed expense category.     4b.Payroll Tax. As an employer, youll pay the federal government taxes of approximately 14% of your employees wages and salaries. It is your contribution to your employees Social Security program. Multiply each months dollar figure for wages and salaries by 14% (0.14). For example, if employees receive $4,560 in wages and salaries in May, the payroll tax is $638 ($4,560 x 0.14 = $638). In other words, the employees in this example cost the employer $5,198 in May ($4,560 + $638 = $5,198) even though the employees gross pay is only $4,560.     These tax rates change from time to time. You can call the IRS for current rates. Most states have additional taxes not included here that vary from state to state. (Workers compensation insurance is covered in line 4e, below.)     4c.Rent/Lease. Rent is the next major item to consider, unless you plan to operate out of your home or some other space which will not result in additional out-of-pocket costs. If youre not renting commercial space, however, bear in mind that local zoning laws may affect you. Youll want to check out zoning ordinances before going ahead with your plans.   If you dont already have a spot in mind, check building availability and costs by talking to a commercial real estate broker and people who occupy space similar to the one you have in mind. You should know what kind of location you want by now-for instance whether you need high visibility or whether an obscure, low-cost location is just as good. You should also know how large a space you need, what plumbing, electrical and lighting you want, and how much storage you need. Sometimes cheap rent doesnt turn out to be such a bargain if you have to build walls or install a bathroom and a loading area, or if a poor location means you get few customers.     NoteLeasehold improvements note: Any time you build something like a wall or a bathroom, it is considered a capital outlay, not a fixed expense. (Capital expenses are covered in Chapter 7, Section B.) Do not show the expenditure as a current operating expense. Only the depreciation is a fixed expense. You can write off or depreciate leasehold improvements over the term of the lease in most cases. (If you dont know what depreciation is, look at line 4h, below. For more help, check with your CPA.)     Normally you will want to sign a lease for a business space rather than to accept a month-to-month

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