Using the Employee Cost Calculator Excel
Hiring a new staff member involves much more than just their base salary. This employee cost calculator excel is designed to help business owners, HR managers, and finance professionals determine the true "burdened cost" of an employee. By accounting for taxes, insurance, and overhead, you can make more informed hiring decisions and budget accurately for the coming year.
- Gross Base Salary
- The annual or monthly pay offered to the employee before any deductions or taxes.
- Payroll Tax Rate
- The combined percentage of employer-paid taxes, including FICA (Social Security/Medicare), FUTA, and SUTA.
- Benefits & Insurance
- Fixed annual costs for health insurance, dental, vision, life insurance, and 401(k) matching contributions.
- Overhead/Misc
- Additional costs such as office space, hardware (laptops), software licenses, and training expenses.
How It Works: The Burdened Cost Formula
To find the true cost of an employee, you must add all employer-paid expenses to the base salary. The formula used by our employee cost calculator excel is:
Total Cost = Salary + (Salary × Tax Rate%) + Benefits + Overhead
- Step 1: Determine the annual gross salary of the position.
- Step 2: Calculate payroll taxes (usually ranging from 10% to 15% in the US).
- Step 3: Sum up all health and welfare benefits provided to the individual.
- Step 4: Estimate the cost of physical assets and administrative support needed.
Calculation Example
Scenario: You are hiring a Marketing Manager with a base salary of $60,000. Your company pays 12% in payroll taxes and provides a $9,000 health insurance package. You also spend $3,000 per year on their equipment and software.
Step-by-step solution:
- Base Salary = $60,000
- Payroll Taxes = $60,000 × 0.12 = $7,200
- Benefits = $9,000
- Overhead = $3,000
- Summing them up: $60,000 + $7,200 + $9,000 + $3,000
- Total Annual Burdened Cost = $79,200
Common Questions
Why is the total cost so much higher than the salary?
This is known as the "labor burden." Employers are legally required to pay various taxes and often provide competitive benefits to attract talent. Usually, the actual cost is 1.25 to 1.4 times the base salary, which is why using an employee cost calculator excel is vital for budgeting.
What is included in payroll taxes?
In the United States, this typically includes the employer's share of FICA (Social Security at 6.2% and Medicare at 1.45%), plus federal (FUTA) and state (SUTA) unemployment taxes. Rates vary significantly depending on your state and your company's unemployment claim history.
How do I calculate the cost per hour?
To find the hourly burdened cost, divide the total annual cost by the number of working hours in a year. A standard full-time employee works 2,080 hours (40 hours per week × 52 weeks). Our calculator performs this calculation automatically to help you understand your billable rates.