The 109,000 total hours worked must be divided by the total number of available work hours in a year, or 2,080 hours. Let our family at FTE Accounting take care of your family’s personal and business accounting needs. Cassie is a deputy editor, collaborating with teams around the world while living in the beautiful hills of Kentucky.
- Under normal circumstances, a full-time employee works 8 hours a day for 5 days a week.
- Let’s say you have an upcoming project and you need to determine all your costs.
- It’s an important element to accounting to determine employee wages, hours of service, and your company’s expenses.
- Full-Time Equivalent (FTE) is a tool to use when calculating the costs of a project or forecasting employee hours and salaries.
- Cassie is a deputy editor, collaborating with teams around the world while living in the beautiful hills of Kentucky.
To do this, multiply the number of weeks in a year with the number of hours for a full-time position. FTE, an abbreviation for “full time equivalent”, counts the approximate number of full-time employees employed by a specific company, but with the inclusion of part-time employees. Gwen is the owner of fte accounting with over 20 years of experience in preparing taxes, bookkeeping, and payroll.
How To Calculate FTE
To identify the FTE for part-time positions, divide the total number of part-time hours worked by the number of hours worked by one full-time worker. In our example, we will divide the total hours worked by Employees D and E by the number of hours worked by Employees A. The list should include the employee’s name and the number of hours they work per week. The 2,080 figure can be called into question, since it does not include any deductions for holidays, vacation time, sick time, and so forth. Alternative measures of FTE that incorporate these additional assumptions can place the number of hours for one FTE as low as 1,680 hours per year.
It is critical for accounting purposes and determining wages, and for calculating the company’s expenses when paying its workers. FTE is a method of calculation to use when you want to accurately forecast specific needs of your business. Essentially, it relates to the actual hours both full-time and part-time employees work during a regular workweek. If you have a mix of full-time and part-time employees, the full-time equivalent (FTE) lets you represents the full-time hours that all of the employees in your business work. FTEs are important for checking HR metrics and determining tax statuses for your business, but luckily they’re pretty easy to calculate on your own. Keep reading to find out everything you need to know about calculating FTEs and how to use them.
Gives insight into organizational costs
That said, full-time equivalent (FTE) is a metric used to determine the total number of full-time workers that you have in an entire organization. In this article, we’ll teach you everything that you need to know about calculating this metric and why it matters. By adding the full-time and part-time hours worked, we can calculate the total number of hours worked by all employees for the year as 109,000. The Full Time Equivalent (FTE) represents a unit of measurement standardized to equal the number of hours worked by the typical full-time employee. Full Time Equivalent (FTE) refers to the unit of measurement equivalent to an individual – worker or student – one unit of a work or school day, applicable in a variety of contexts.
- According to the Affordable Care Act (ACA), employers with 50 or more FTEs are required to offer ACA-compliant benefits.
- That said, full-time equivalent (FTE) is a metric used to determine the total number of full-time workers that you have in an entire organization.
- Employees who have more than 50 full-time employees or FTE workers, known as applicable large employers (ALE), must be in compliance with rules laid out by the ACA.
- Under the PPP program, businesses can apply for funding to keep employees on payroll and cover certain operational costs.
- The FTE concept is used in a number of measurements that compare headcount to revenues, profits, or square footage.
- We at FTE believe the most important part of any small business is connecting with the people of the communities we serve.
- We help individuals save money by implementing different strategies to reduce their tax burden or maximize their refund.
One part-time employee who works ten hours per week and one part-time employee who works 25 hours per week. To calculate the total FTE, add the number of FTEs worked by full-time employees (1 FTE for each full-time worker) to the part-time FTE you calculated in step five. Next, add the total hours worked by full-time employees and the total part-time hours worked by part-time employees. Calculate the FTEs by determining the number of hours worked by full-time or part-time employees in a year.