Accountants Labour Cost Formula
Learn how to calculate the fully loaded annual, monthly and hourly cost of employing accounting staff.
The accountants labour cost formula estimates the all-in cost of an accounting employee or team. It starts with paid hours and gross pay, then adds employer on-costs, benefits and allocated overhead so staffing budgets and internal pricing can use a more complete cost figure.
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Total Annual Labour Cost
Where:
Calculate one accountant's annual pay, add payroll-related employer costs, benefits and overhead, then multiply the all-in annual amount by the number of accountants.
Variables Explained
| Variable | What It Means | Unit |
|---|---|---|
| N - Number of accountants | The number of accounting employees included in the estimate. | number |
| R - Hourly pay rate | Average gross hourly pay or hourly salary equivalent for each accountant. | currency |
| H - Hours worked per week | Average paid working hours for one accountant each week. | hours |
| W - Paid weeks per year | Number of weeks for which pay is included in the annual estimate. | weeks |
| E - Employer on-costs rate | Employer payroll taxes, social contributions, pension costs and similar costs as a percentage of gross pay. | percent |
| B - Annual benefits per accountant | Annual direct benefit costs per accountant, such as insurance, training allowances or other benefits. | currency |
| O - Annual overhead per accountant | Annual allocated business overhead per accountant, such as software, equipment, workspace and management support. | currency |
Step-by-Step Calculation
Calculate annual paid hours
Multiply weekly paid hours by paid weeks to find the annual paid hours for one accountant.
annualHoursPerAccountant = hoursPerWeek * weeksPerYear
Calculate annual gross pay
Multiply the hourly pay rate by annual paid hours before adding employer costs or overhead.
annualGrossPayPerAccountant = hourlyPayRate * annualHoursPerAccountant
Calculate employer on-costs
Apply the employer on-cost percentage to gross annual pay.
employerOnCostsPerAccountant = annualGrossPayPerAccountant * employerOnCostsRate / 100
Calculate fully loaded annual cost per accountant
Add pay, employer on-costs, benefits and allocated overhead for one accountant.
fullyLoadedCostPerAccountant = annualGrossPayPerAccountant + employerOnCostsPerAccountant + annualBenefitsPerAccountant + annualOverheadPerAccountant
Calculate total team cost
Multiply the fully loaded cost per person by the team size.
totalAnnualLabourCost = fullyLoadedCostPerAccountant * numberOfAccountants
Calculate monthly and hourly costs
Spread the annual team cost over 12 months and divide one person's all-in annual cost by paid annual hours.
totalMonthlyLabourCost = totalAnnualLabourCost / 12; loadedHourlyCost = fullyLoadedCostPerAccountant / annualHoursPerAccountant
Example: Three-person accounting team
Annual paid hours
37.5 × 52
1,950 hours
Annual gross pay
$30.00 × 1,950
$58,500
Employer on-costs
$58,500 × 15 / 100
$8,775
Fully loaded cost per accountant
$58,500 + $8,775 + $1,500 + $4,000
$72,775
Total annual team cost
$72,775 × 3
$218,325
Monthly and loaded hourly cost
$218,325 / 12; $72,775 / 1,950
$18,193.75 per month; $37.32 per hour
Final Result
The estimated fully loaded cost is $218,325 per year for the team, averaging $18,193.75 per month and $37.32 per paid hour per accountant.
Assumptions
- ✓All accountants in the estimate have the same average pay, paid hours, benefits and allocated overhead.
- ✓Employer on-costs are expressed as a percentage of annual gross pay.
- ✓Benefits and overhead are annual amounts for each accountant.
- ✓The monthly result is the annual total divided evenly across 12 months.
- ✓Paid hours are used as the denominator for the loaded hourly cost.
Limitations
- !Actual payroll-related costs can vary by location, employment arrangement and changes in applicable rules.
- !The estimate does not automatically include bonuses, commissions, overtime premiums, severance or recruitment costs.
- !Paid hours may not equal productive or billable hours because leave, training, meetings and administration can reduce available client time.
- !Allocated overhead is a planning assumption and may differ across roles, offices or team sizes.
Common Mistakes to Avoid
Entering a monthly salary as though it were an hourly pay rate.
Using working weeks instead of paid weeks when wages continue during paid leave.
Adding employer on-costs to the overhead field as well as entering them as a percentage.
Leaving out accounting software, equipment or workspace when an all-in cost is required.
Treating the loaded hourly cost as a client billing rate rather than an internal employment-cost estimate.
Related Formulas
Frequently Asked Questions
What is the formula for fully loaded accountant cost?
Fully loaded cost per accountant equals annual gross pay plus employer on-costs, annual benefits and annual allocated overhead.
How do I calculate annual gross pay from an hourly rate?
Multiply the hourly pay rate by paid hours per week and paid weeks per year.
How are employer on-costs calculated?
Multiply annual gross pay by the employer on-cost rate and divide by 100.
How do I find the loaded hourly cost of an accountant?
Divide the fully loaded annual cost per accountant by that accountant's annual paid hours.
Are benefits included in the employer on-cost percentage?
That depends on how you define the percentage. To avoid double counting, enter benefits separately only when they are not already included in the on-cost rate.
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