Knowing the percentage of your payroll expense that goes to pay benefits helps any manager understand the impact of the company's benefits package on the payroll bottom line. These figures are an important part of understanding your company's cash flow and payroll liabilities. With a few simple steps, you can understand the percentage of your payroll expense that is being spent on employee benefits as opposed to direct employee compensation.
Add the salary and benefits totals together to obtain a total, or loaded, salary cost.
Calculate the cost of benefits. This should include all benefits offered by the company, including insurance, retirement, profit sharing, worker's compensation, gym memberships and any other expenses which are a part of the company benefit package.
Divide the benefits cost by the loaded salary cost. Multiply this result by 100 to obtain the actual percentage. This is your benefits percentage of payroll.
Calculate the total salary cost. This should include salaries, overtime and all federal employer payroll taxes.
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