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Ask HN: SF developer burden rate @ $100k?

13 points by lquist ↗ HN
Trying to budget how much developers will cost me as a business owner. The technical term seems to be 'burden rate' (http://www.investopedia.com/terms/b/burden-rate.asp#axzz2KiL9czqZ), but I'm interested in the legally-mandated 'burden rate', not including optional benefits.

For example, if I want to pay a dev $100k or $125k, how much will it cost me as a company with Social Security, and payroll taxes, etc. all included?

5 comments

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codegeek
Disclaimer: I am not a CPA or Lawyer so take this advice purely as a guidance based on my own experience of running my company.

The "cost" of an employee generally includes:

    Salary paid
This in your case would be lets say 100K

    Payroll taxes (employer portion)
Usually has 2 main components. Social Security and Medicare also combined to be called FICA. SSN is 6.2% of W-2 salary (applies max to 110K). Medicare is 2.45% of entire W-2. So in your case, totak of 7.65% of 100K = $7650

    Health Insurance premium for the employee
This really varies and depends on what you offer. I will just estimate an average of say $500-$800 per month per employee. So you are looking at about $6000-$10,000 per year. Make it $8000 average for this example.

    retirement account match
Really varies depending on whether you contribute or not. Lets say you match about 1000 per year max (a very average conservative matching) which is 1% of the salary.

    State level disability insurance
This depends on state. Some states charge employers while in some, employees pay for it.

    Workers compensation
Average cost per employee can be about $500-$1000 per year.

    Other costs to manage employee record
These could include payroll software cost per employee, accounting cost/employee, other benefits provided. I would keep about $500-$1000 per year min.

Adding all of the above, you are looking at approx 100K + 18,650 = 118,650

I am just giving an estimate here of course. But you hopefully got the idea.

speeder
That is very sweet.

In Brazil for every 1000 you pay someone in direct wage, about extra 450 are paid to government (total burden of 1450 to pay 1000 of wage)

Of the 1000 that the "someone" received, about 100 go for your retirement savings, 275 in federal taxes, and about more 100 in other random taxes and fees.

(so yes, this mean that if you theoretically pay 1000 as salary, the person ends with 525, and you pay extra 450 to the government, that ends in total with 925! yay excessive regulation and taxing!!!!)

thifm
You are wrong, the burden rate in Brazil is 85% of the employee's gross salary. So, using your example:

$1000 salary, $850 goes to the government.

When the employee receives this salary of $1000, about 20% goes to government.

In the end, the government ends up with HALF of what the employee gets paid.

This is why our economy is shitty for entrepreneurs.

doug1001
my employer hits my department budget with salary x 1.5 for every employee in my dept. I thought this was too high, so i went to see the controller, who showed me the numbers and indeed it is accurate--in other words, 1.5 x salary is a very good estimate for the actual hard dollar cost to the company for each employee, as a function of his/her salary. The intention was to capture all includes taxes, insurance, office space, hardware, meals, per-seat share of enterprise app licenses, etc.