OH

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Generally speaking an employer carrys about 20% burden on an employee's earnings. How that adds into the additional overhead of an employer and whether they carry health and retirement benefit not considered into that percentage.
Are you considering impact of adding employees? Or simply trying to judge if you are marking up competitively?
 
Fred B said:
Generally speaking an employer carrys about 20% burden on an employee's earnings. How that adds into the additional overhead of an employer and whether they carry health and retirement benefit not considered into that percentage.
Are you considering impact of adding employees? Or simply trying to judge if you are marking up competitively?
Click to expand...

just as an FYI to the OP, my labor burden is 25%. My OH figure is a straight % of total direct + indirect costs.

example on labor only....

Employee A earns $30/hr, w/ burden its $37.50/hr, + $5/hr fringe = $40.50, + payroll tax = $43.60, + OH = $48.83/hr total
 
brantmacga said:
just as an FYI to the OP, my labor burden is 25%. My OH figure is a straight % of total direct + indirect costs.

example on labor only....

Employee A earns $30/hr, w/ burden its $37.50/hr, + $5/hr fringe = $40.50, + payroll tax = $43.60, + OH = $48.83/hr total
Click to expand...
Help me understand what the difference between burden and OH is?
And when you calculate payroll tax would you not just include the 30/hr?
You surely dont pay payroll tax on the 'burdan'
Sorry i know nothing about accounting but am interested.
And where you you account for the van + gas? is that variable costs?
Thanks
 
gene6 said:
Help me understand what the difference between burden and OH is?
And when you calculate payroll tax would you not just include the 30/hr?
You surely dont pay payroll tax on the 'burdan'
Sorry i know nothing about accounting but am interested.
And where you you account for the van + gas? is that variable costs?
Thanks
Click to expand...

I'm not an accountant; I just run the numbers the way the accountant says to.

Labor burden includes things like PTO, sick days, health insurance, etc.... Not every employee gets equal amounts of PTO, and not all of them opt-in to the health insurance, but the average across the board is 25%.

The half of payroll tax the employer pays is not included in the employees base hourly rate. You do pay payroll tax on burden because its part of the paycheck; sick days, PTO days, etc, that goes in like regular paycheck hours.

I account for fuel and maintenance within each jobs direct cost. I account for the vehicle payments, office staff, the office mortgage, etc in overhead.
 
Gotchya makes sense, If I am not mistaken my health insurance gets taken out of my check 'pre tax' and the bosses here get all kinds of tax breaks or write-offs on our health insurance. I remember there was a big fuss about it many years ago when healthcare changed.
I know in our accounting each van is considered a 'department' so if a team of 1-3 people are working a job out of a particular van, supplies , tools , gas etc has to be filed under that vans 'department'.
 
insurance comes out pre-tax, but for simplicity of pricing work, I just leave payroll tax on the entire labor+burden rate. not everyone has the same plan, pays same premium etc.
 
brantmacga said:
just as an FYI to the OP, my labor burden is 25%. My OH figure is a straight % of total direct + indirect costs.

example on labor only....

Employee A earns $30/hr, w/ burden its $37.50/hr, + $5/hr fringe = $40.50, + payroll tax = $43.60, + OH = $48.83/hr total
Click to expand...
What's in your burden and fringes? Thank you!!
 
horsegoer said:
What's in your burden and fringes? Thank you!!
Click to expand...

burden is health insurance, 401k match, PTO, etc. etc... Fringes is where I account for things like company phone, truck etc.

When I bid a job, I account for all of the mileage related to that job within my cost. I use fringe benefits to account for the additional mileage of guys driving them home. we have a lot of trucks on the road, so its just an average across all labor hours.
 
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