You’ve got to perform a balancing act to weigh the expense of an employee against the extra revenue that the employee’s presence will generate. It’s a thorny issue, but you must have the hard figures before you make the leap to employer.

First, consider the basic costs such as wages and payroll taxes. Add to that workers’ compensation, which is mandatory in all states except New Jersey and Texas, where it’s voluntary.

But if you want to snare a top-notch employee, you’ll have to go beyond the basics and offer some perks. At the very least, paid holidays, sick days, vacation time and the opportunity for incentive raises should be part of the package. To hire the candidate you want, you might need to sweeten the deal with a combination of bonuses, health insurance, a retirement plan, family leave or reimbursement for professional development.

Aside from those costs, remember to factor in the time and money you’ll have to invest to advertise the job opening, conduct interviews and run reference checks. The price tag for hiring increases if you need to purchase computer equipment, buy office furniture for the worker or install another telephone line. It all takes time, and time is money.

New demands on your time won’t stop after you hire the employee. You’ll spend hours conducting performance evaluations and processing paperwork to meet government regulations. Training your new employee will also take a chunk of time. It’s a big investment, says Ellen Bayer of the American Management Association.

“Companies are not going to be able to rely merely on selective hiring to achieve their goals – they will have to invest more in training new hires,” Bayer explains. “For all the concern about the shortage of high-tech workers, we are facing a lack of job applicants who can read and write.”

And, heaven forbid, your new worker could decide to move on in six months, leaving you to repeat the hiring and training rollercoaster. Employee turnover is costly, disruptive to your business and a consideration you shouldn’t take lightly.

“Any company today, or any manager, who’s rather cavalier about turnover – not overly concerned about losing talent – really better take a look at it and be concerned,” advises Sharon Jordan-Evans in her book Love ‘Em or Lose ‘Em: Getting Good People To Stay (Berrett-Koehler, 1999).

After you figure the real cost of hiring an employee, weigh it against the extra income you anticipate to gain. If you hire a sales person, the math is easy. But if you’re looking for an assistant, a marketing whiz or a bookkeeper, the arithmetic is a bit trickier. In those cases, try to estimate how much more revenue you can generate yourself by delegating the non-revenue producing duties.

For instance, can you take on more customers or accept more work from existing clients? Will the employee free up more of your time to expand your customer base? Be realistic because the decision will have a dramatic impact on your bottom line. If the extra revenue doesn’t outweigh the expense of an employee, then you’re moving in the wrong direction.