Do you know how to determine your employees cost per hour? This may help you to make better use of their time in your business. That extra hour of meeting with five people could easily cost your company more than $500 in real cost that could be used towards your Upper Valley Payroll Services. Cost matters in every aspect of business. What you spend matters too! That extra hour at the end of a shift, the project that was supposed to be 30 hours but ended up being 40 hours, it’s good to know what everything in business costs you.
How to calculate the real costs
To calculate how much your employees cost you, you will need the gross hourly rate that you currently pay them. Here’s an example:
If you are paying “joe” 100,000 annual gross income as an example. That would be for 48 weeks worth of work if you give him holiday pay and vacations throughout the year. Now divide 100,000 by 48, and you should get $2,083.00 per week. Now divide $2,083.00 by 40 hours per week. Now you should get $52.00 per hour that you are paying “joe” for a gross wage. Keep in mind that this is the gross wage. This does not take into account taxes, overhead, workspace, utilities, health insurance, and any other benefits you provide to “joe.”
Now that you have figured out the gross hourly wage, don’t stop there. Let’s think about the concept of the forty hour work week. Is that how many hours people work in your business. Here are some questions to consider: How many overtime hours do your employee work each week? How productive are your employees? How much of their actual work time is spent on productive tasks and not social media, getting coffee, chatting with employees? Most employees are only 75% effective, the rest of the time is wasted on other tasks.
Your employee sitting at a desk has costs attached to him/her. The square footage they occupy, the furniture they use, the equipment the use, the internet, phone, electricity, food, etc.. You have to consider all of these additional costs and how these costs now are added to the gross wage of what you are paying that employee. Here’s a free employee calculator online.
In payroll, you have to calculate taxes, social security, and any other deductions that each employee must have taken out of their payroll each week. All of these deductions need to stay compliant with every changing laws in each state and on a federal level. This can be an overwhelming task for anyone in your company.
This is where CheckWrite Payroll services an Upper Valley Payroll Service can help you to cut costs, save time and stay accurate in all of your payroll needs. Give us a call to find out how we can save you money and time in your business.