How do you calculate the True Cost of a startup employee?

The first hire for a startup is an exciting time! When a startup goes beyond the founders and has employees, the business can start to feel “real.” Understanding the cost of a startup employee goes beyond the salary though. Here’s a list of the items you need to consider when figuring out how much a new employee would cost:

  • Salary, bonuses and commissions - no surprise there
  • Employment taxes - which can be more than you’d think
  • Benefits - usually about 20% of salary
  • Perks - lunch benefits, learning benefits, cell phones
  • Onboarding costs - computer, desk, company tshirt, etc.
  • Ground transportation if you’re reimbursing for Ubers, etc.
  • Web services and software allocations - how much software licenses do you need for that person? It can really add up if they are a web developer, or a sales person using Salesforce, for example
  • Allocated rent - especially if you are in a WeWork or a shared space where you pay per person