When you have employees, their salaries and wages are not the only expenses you'll take on. Depending on your location, other employee-related expenses may include:
- Payroll taxes
- Worker's compensation insurance
- Health insurance
- Other benefits you might plan to cover for your employees
These expenses need to be reflected in your financial projections, but it's not necessary to try to predict them in precise detail.
Instead, financial forecasts typically use what's called a "burden rate." This is just a simple percentage of your total salaries, calculated into your forecast to cover these related expenses. LivePlan has a default burden rate of 20%, and you can adjust that for your local area.
Note: The burden rate only applies to on-staff employees, not to contract workers.
To change the burden rate:
- In the Forecast tab on the Personnel page, click the Change Burden Rate button:
- Select Constant rate or Varying rates over time
For Constant rate: Enter the desired burden rate for the duration of your plan:
For Varying rates over time: Enter the monthly burden rate:
- Click Save & Exit. The rate you entered will be applied to all regular employees in your personnel plan.
In the LivePlan Profit and Loss statement, you'll see the calculated amount on the "Employee Related Expenses" line.