How to Manage Labor Costs for Your Business

For a first-time company owner, labor costs might be overwhelming when it comes to hiring employees. Labor costs are the most significant expense in every business, and it is essential to have workers for your business because there would be no company without your employees. It may appear that the simplest approach to avoid spending so much money is to fire people, decrease wages, and lower total expenses, but this is not the case. Grouping costs together, optimizing staff schedules, and understanding how much payroll is in your business are the easiest ways to control your labor costs. We will explain how:

Group Costs Together

One way to manage labor costs is by grouping costs together. Labor costs refer to dividing employees into groups based on responsibilities to see which groups cost the most. For example, kitchen staff such as chefs and kitchen workers who run the dishwasher can be grouped together. You may need to assess how much each group will cost you and how you can play with the hours in order to lower costs and maximize efficiency. If for example you have bartenders that are more expensive than your waiters, you may want to cut the bartenders out of your restaurant. You need to compare and contrast each group to see what is required in your restaurant and what isn’t.

Optimizing Staff Schedules

A great method of making sure you know your budget for your employees is by having a working schedule. By having a set of hours when the store is open and what hours employees are expected to work from, a schedule can help you and the workplace become more organized.Your employees will know what their schedule is like ahead of time and can plan accordingly. In the same way, by having all the employees’ schedules, you can plan ahead for any situation that may occur. For example, if an employee is out sick, you know that other employees can cover the shift since you have their schedule and see if they can cover it. This way, you can also know if employees are working overtime or double shifts and make sure everyone is paid the appropriate amount.


When you want to pay the proper amount for your employees, consider the average labor cost. To calculate the labor costs, you need to calculate the gross and hourly wages, such as vacation days, taxes, and benefits. Today, many businesses prefer to pay employees with a payroll service rather than hire a bookkeeper. In-house payroll will save you more money than hiring accountants or bookkeepers to keep track of your payroll. You can do this manually, or you can do this digitally using a point-of-sale system. A helpful small business labor cost calculator can be found at this link.

You may want to look into getting a point of sale system (POS) that you wish to purchase as a component of operating employee expenses. The NRS POS system offers a Premium Feature called “Employee Time Clock,” which includes setting up digital time clocks for multiple users right on the POS. A digital time clock makes it easier for business owners to track and analyze the hours they have worked.

Leveraging the NRS POS, a store owner can save time- and save and make more money – with built-in features and extra subscription Premium Features.

Start with NRS today!

Don’t fall behind by missing out on all that modern POS systems can do for your small business. Contact NRS today at (833)-289-2767 or [email protected] to learn more about how modern ingenuity and resources can help you maximize profits.