How Do You Calculate Total Payroll Costs?
Total payroll costs are calculated by adding up the wages or salaries of all employees, including any overtime pay, bonuses, and commissions. Additionally, employer-paid taxes, such as Social Security and Medicare, as well as any employee fringe benefits, such as health insurance and retirement contributions, must also be accounted for. The total cost is then divided by the number of employees to determine the average cost per employee.