How much does a salary of 40K cost the employer?

beetlebailey

Can anyone tell me how much it`ll cost me as an employer to employ someone on a salary of 40k per year?
Thanks

DoMyBooks

Employers PRSI is 10.75% so straight away €44,300.

After that your getting into non direct costs like Holiday Pay (can you do without them?) pension costs, training costs the list goes on.

As a rule of thumb I would multiply the salary by 1.2 to get a rough idea of the cost to the employer.

kmick

Rule of thumb once you include things like facilities and all benefits is 40%.

BnB

I was calculating this in the last few weeks :

One of our Staff Members who is on € 40,200...

Wages : € 40,200
Employer PRSI : € 4,320
Mobile Phone : € 840
Expenses (Hotels, Food etc for trips) € 2,000
Share of Office Expenses : € 4,200

Obviously, the only part of all that that is not flexible is the wages and the PRSI.

Everything else is movable.

For example, in our case, staff need phones because they are on the road a bit. So we include it. Also, because of this we have to budget for traveling expenses.

However, we also have some office based staff and they are much more straight forward.

Also, while it is good practice when doing costings to include facilities etc, you have to be realistic too. Do you already have space for him/her in your office. Is this new employee going to cause your rent to go up ? If not, then you don't really need to factor this in when deciding if you can afford them.

The short answer IMO is that you really have to sit down and write out what you are going to spend.

Start with the Salary and the Employer PRSI.
Then look at :
Rent (Will you have to pay more ?)
Furniture (Will you have to buy a desk/chair etc)
IT (Will you have to buy a pc/printer/Specialist Software etc)
Training (Will they require any training)
Phone (Will you have to provide a mobile or pay for extra land line charges)
Company Car / Van ?

While rules of thumb like Wages X 1.2 or 1.4 or whatever are useful, for a small company looking to take on employees, you really have to do the sums.

million79

BnB wrote: »

I was calculating this in the last few weeks :

One of our Staff Members who is on € 40,200...

Wages : € 40,200
Employer PRSI : € 4,320
Mobile Phone : € 840
Expenses (Hotels, Food etc for trips) € 2,000
Share of Office Expenses : € 4,200

Obviously, the only part of all that that is not flexible is the wages and the PRSI.

Everything else is movable.

For example, in our case, staff need phones because they are on the road a bit. So we include it. Also, because of this we have to budget for traveling expenses.

However, we also have some office based staff and they are much more straight forward.

Also, while it is good practice when doing costings to include facilities etc, you have to be realistic too. Do you already have space for him/her in your office. Is this new employee going to cause your rent to go up ? If not, then you don't really need to factor this in when deciding if you can afford them.

The short answer IMO is that you really have to sit down and write out what you are going to spend.

Start with the Salary and the Employer PRSI.
Then look at :
Rent (Will you have to pay more ?)
Furniture (Will you have to buy a desk/chair etc)
IT (Will you have to buy a pc/printer/Specialist Software etc)
Training (Will they require any training)
Phone (Will you have to provide a mobile or pay for extra land line charges)
Company Car / Van ?

While rules of thumb like Wages X 1.2 or 1.4 or whatever are useful, for a small company looking to take on employees, you really have to do the sums.

Can I be one of your staff?

AARRRRGH

Dont forget that those costs are tax deductible. Assuming you make a profit

noodler

As an employee, does employer's PRSI count as part of your wage?

I mean if you earn 25K a year, does employer's PRSI technically form part of that?

Nuttzz

noodler wrote: »

As an employee, does employer's PRSI count as part of your wage?

I mean if you earn 25K a year, does employer's PRSI technically form part of that?

No, Employers PRSI is a tax on labour

DubTony

BnB wrote: »

I was calculating this in the last few weeks :

One of our Staff Members who is on € 40,200...

Wages : € 40,200
Employer PRSI : € 4,320
Mobile Phone : € 840
Expenses (Hotels, Food etc for trips) € 2,000
Share of Office Expenses : € 4,200

.......


The short answer IMO is that you really have to sit down and write out what you are going to spend.

Start with the Salary and the Employer PRSI.
Then look at :
Rent (Will you have to pay more ?)
Furniture (Will you have to buy a desk/chair etc)
IT (Will you have to buy a pc/printer/Specialist Software etc)
Training (Will they require any training)
Phone (Will you have to provide a mobile or pay for extra land line charges)
Company Car / Van ?

While rules of thumb like Wages X 1.2 or 1.4 or whatever are useful, for a small company looking to take on employees, you really have to do the sums.

That wasn't a short answer. :rolleyes:

Except for training, the costs you've listed here aren't a cost of employing somebody. They're a cost of business expansion. A new employee doesn't add to the cost of rent. You don't need more space because you hired somebody. You need more space because you're doing more business.

Based on your figures, we should add in the cost of toilet roll, electricity for the fridge he keeps his lunch in, and the wear and tear on the carpet; and throw that into the wages budget as well.

To the OP, the cost you need to be concerned with is salary + PRSI. Holiday pay is included in a salary. Everything else is incidental.

BnB

DubTony wrote: »

That wasn't a short answer. :rolleyes:

Except for training, the costs you've listed here aren't a cost of employing somebody. They're a cost of business expansion. A new employee doesn't add to the cost of rent. You don't need more space because you hired somebody. You need more space because you're doing more business.

Based on your figures, we should add in the cost of toilet roll, electricity for the fridge he keeps his lunch in, and the wear and tear on the carpet; and throw that into the wages budget as well.

To the OP, the cost you need to be concerned with is salary + PRSI. Holiday pay is included in a salary. Everything else is incidental.

If you are a small business, and you are taking on a new staff member they you most certainly do have to look at what extra costs that person staff member is going to bring to the business.

While there is no need to go down the route of counting the sheets of Jacks paper, you do have to take into account all costs. It will only take a few minutes to jot them down and is well worth completing. If you are running something like a shop where a new employee adds very little expense they might now be much need for it. But if you have a business where employees need training, equipment, vehicles, phones etc.... then there certainly is.

On rent, if you have to take on more office space to accomodate a new employee, then that is most certainly a cost assotiated with taking on that employee.

DubTony

BnB wrote: »

If you are a small business, and you are taking on a new staff member they you most certainly do have to look at what extra costs that person staff member is going to bring to the business.

While there is no need to go down the route of counting the sheets of Jacks paper, you do have to take into account all costs. It will only take a few minutes to jot them down and is well worth completing. If you are running something like a shop where a new employee adds very little expense they might now be much need for it. But if you have a business where employees need training, equipment, vehicles, phones etc.... then there certainly is.

On rent, if you have to take on more office space to accomodate a new employee, then that is most certainly a cost assotiated with taking on that employee.

Did you not read my post? I explained that the costs associated with employing somebody aren't payroll costs. If the OP had wanted the answer to how much the overall costs associated with employing somebody are, you'd be getting somewhere toward a correct answer. He didn't. He asked what it costs to pay somebody 40k a year which has damn all to do with cars, phones, and computers or how many paper clips the extra guy uses.

DoMyBooks

DubTony wrote: »

Did you not read my post? I explained that the costs associated with employing somebody aren't payroll costs. If the OP had wanted the answer to how much the overall costs associated with employing somebody are, you'd be getting somewhere toward a correct answer. He didn't. He asked what it costs to pay somebody 40k a year which has damn all to do with cars, phones, and computers or how many paper clips the extra guy uses.

You forgot toilet paper? We cost on the basis of one movement per day 4 sqaures per wipe and 3 wipes per movement. Triple for Guinness drinkers.