CFO

[admin]

As a CFO for hire I notice that many business owners do not calculate labor burden as part of their actual labor costs. Many put these costs in as overhead or do not include them at all when they are clearly a labor cost which in most cases is variable to the use of labor. The most common labor burden costs are:

Payroll Taxes – This includes the employer’s contribution to FICA and Medicare as well as both Federal and State unemployment taxes,

The employer portion of all employee Benefits: - Health insurance, Dental Insurance, Life insurance etc…,

Payroll processing costs,

Workers Compensation Insurance

In order to calculate labor burden take all of the projected labor burden expenses for the period you want to analyze. The period can be a month, quarter or year and divide these projected burden expenses by the amount of projected labor dollars for the same period. As you go forward if payroll is lower or higher than projections by 5% or more you should recalculate the burden rate based on the new projected payroll. The same recalculation needs to be done if your projected burden expenses are off higher or lower by 5% or more. You can also simply take last year’s actual results for Labor Burden expenses and payroll and perform the same calculation on actual results instead of projected results. I like to use projected results. This percentage needs to be applied to payroll dollars applied to each sales transaction or quote.

Calculating Labor Burden and incorporating it as a labor cost is one of many important CFO Services.


CFO Services

CFO

Next Step CFO

CFO

CFO Services Boston MA

Business Forecasting

Cash flow Problems

Chief Financial Officer

CashTell

CFO Blog

Cash Flow Management

CFO Boston MA

Part time CFO

Interim CFO

CFO Duties

CFO Consulting