Payroll Burden Calculator

Formula

The formula to calculate the Payroll Burden (PB) is:

\[ \text{PB} = \frac{\text{TPC} + \text{TBC} + \text{TT} + \text{TIC}}{\text{E}} \]

Where:

$ \text{PB} $ is the payroll burden per employee
$ \text{TPC} $ is the total payroll costs
$ \text{TBC} $ is the total benefits costs
$ \text{TT} $ is the total taxes
$ \text{TIC} $ is the total insurance costs
$ \text{E} $ is the total number of employees

What is Payroll Burden?

Payroll burden refers to the total cost an employer incurs for an employee, beyond their base salary or wages. This includes additional expenses such as benefits (health insurance, retirement contributions), taxes (social security, Medicare), and insurance (workers’ compensation, unemployment insurance). Understanding payroll burden is crucial for businesses to accurately budget and manage their labor costs. It provides a more comprehensive view of the true cost of employing staff, ensuring that all associated expenses are accounted for in financial planning and decision-making processes.

Example Calculation

Let's assume the following values:

Total Payroll Costs (TPC) = $500,000
Total Benefits Costs (TBC) = $100,000
Total Taxes (TT) = $50,000
Total Insurance Costs (TIC) = $25,000
Total Number of Employees (E) = 50

Using the formula to calculate the Payroll Burden:

\[ \text{PB} = \frac{500000 + 100000 + 50000 + 25000}{50} = \frac{675000}{50} = 13500 \text{ dollars per employee} \]

The Payroll Burden is $13,500 per employee.