The costs of hiring an employee are typically 1.25 to 1.4 times the base salary range, therefore, a salary of 50,000 a year will actually cost an employer 62,500 to 70,000. The cost for a salary is often much higher than the actual salary because the business not only has to pay for the basic salary, but also must pay for recruiting expenses, employment taxes, benefits, space and other equipment.Continue Reading
To establish a base salary for an employee, an employer will first need to look at the expected ranges of the salary within the field or for the position that the employee will hold. This data can be found on annual Compensation Surveys in a publication within the employer's industry. For new startups, the starting wage of the employee should be close to those of the later employees so that any risk component for being an early hire will be "made up" in the equity compensation component.
Employment taxes will need to take into account workers' 's compensation premiums and also allow allowances for Social Security/FICA (Federal Insurance Contributions Act), unemployment/FUTA (Federal Unemployment Tax Act) and Medicare. There are also benefits to consider. Most employers cover life insurance and health insurance. However, other benefits could include long-term disability insurance, dental plans, dependent care assistance, tuition reimbursement and retirement plans.Learn more about Financial Calculations
In order to make burden rate calculations, determine the person's hourly wage, days that person can work and day that person may be absent, multiply potentially absent days by eight hours and subtract this figure from available hours per year, determine how much money the employee costs per year, take his or her available hours and multiply this by the person's hourly wage and then divide this number of actual hours worked. When determining the total employee costs per year, make sure to include all money related to insurance, supplies, payroll taxes, benefits, training and meals.Full Answer >
Debt service coverage ratio is calculated by dividing a company's net operating income by its total debt service costs. Also known as earnings before interest and taxes, net operating income is the cash flow left over after all operating expenses are paid, while total debt service refers to all expenses related to satisfying debt, including interest expenses, principal payments and sinking fund obligations.Full Answer >
A person can calculate capital allowances by taking the costs associated with the purchase of certain business assets and then deducting those costs from pretax profits, notes GOV.UK. Specific assets eligible for the capital allowance deduction include equipment, machinery and business vehicles.Full Answer >
To calculate gross profit, subtract the variable costs or costs of goods sold from the revenue generated by a business during a given period. If revenue equals $150,000 and COGS equals $75,000, for instance, the gross profit is $75,000.Full Answer >