4 ms·

Wow. That's amazing. I genuinely had no idea that the costs of running could be that high. Thanks for sharing that info. It boggles my mind as to how much money

by nstart 11y ago

Wow. That's amazing. I genuinely had no idea that the costs of running could be that high. Thanks for sharing that info. It boggles my mind as to how much money startups probably need just to stay break even.

x0x0 11y ago
I think the parent's estimate is a little high, but here's what I know. w2 employers are responsible for - 6.2% SS + 1.45% medicare fica taxes - health insurance, of which the employer's share can easily run $1k/mo for a couple in their 30s - 1.5% payroll tax if in sf, or 0.34% payroll tax for mta in nyc; so if someone makes $100k in sf, the employer pays (1.0 + 0.0765 fica + 0.015 city payroll tax) * 100k + 12*1k health insurance + 12 * $1200 monthly rent + 12 * $100 snacks/office supplies + maybe $500/year for unemployment insurance and various other fees totaling (1.0765 + 0.015) * 1e5 + 12*(1e3 + 1.2e3 + 100) + 500 = $137k. That doesn't include any activities, hardware, or meals. If you buy lunch, a former employer budgeted $14 per person day, so assuming 250 work days = $3500/year
- bane 11y ago
  You also have to consider employees who make money vs. employees who cost money. Administrative overhead, management, etc. aren't often major contributors to revenue, but their cost metrics are the same. So the burden on money making employees can be considered to be even higher. You can get some economies of scale with more revenue generating employees vs. cost center employees, but no matter what, as companies grow they need cost center employees to make the ship sail.
- zaroth 11y ago
  Another 0.9% ($939 max) for CA SDI, $250 workers comp, and the employer probably has some sort of life & disability of their own as well, call it another $500. Payroll & benefits admin for $500. $12k health insurance contribution seems low, but I suppose population skews to 20s and single. I do think 70% is about the best you can really do ($142k), but I agree 50% would be lavish. Throw in a regular dinner program, or some regular offsite meals & entertainment doesn't hurt. Since 274(e) expenses are fully deductible, IRS is basically paying for 35-40% of that annual picnic, holiday dinner, Caribbean retreat, etc. so it's smart for companies to shell out some real money for these outings.
  - x0x0 11y ago
    Thanks! I think there's also about $500/pp of various fees in CA; stuff charged on the first $7k of income. tangent: security via obesity is a cool idea.

by nstart 11y ago

x0x0 11y ago

I think the parent's estimate is a little high, but here's what I know. w2 employers are responsible for - 6.2% SS + 1.45% medicare fica taxes - health insurance, of which the employer's share can easily run $1k/mo for a couple in their 30s - 1.5% payroll tax if in sf, or 0.34% payroll tax for mta in nyc; so if someone makes $100k in sf, the employer pays (1.0 + 0.0765 fica + 0.015 city payroll tax) * 100k + 12*1k health insurance + 12 * $1200 monthly rent + 12 * $100 snacks/office supplies + maybe $500/year for unemployment insurance and various other fees totaling (1.0765 + 0.015) * 1e5 + 12*(1e3 + 1.2e3 + 100) + 500 = $137k. That doesn't include any activities, hardware, or meals. If you buy lunch, a former employer budgeted $14 per person day, so assuming 250 work days = $3500/year

bane 11y ago
You also have to consider employees who make money vs. employees who cost money. Administrative overhead, management, etc. aren't often major contributors to revenue, but their cost metrics are the same. So the burden on money making employees can be considered to be even higher. You can get some economies of scale with more revenue generating employees vs. cost center employees, but no matter what, as companies grow they need cost center employees to make the ship sail.
zaroth 11y ago
Another 0.9% ($939 max) for CA SDI, $250 workers comp, and the employer probably has some sort of life & disability of their own as well, call it another $500. Payroll & benefits admin for $500. $12k health insurance contribution seems low, but I suppose population skews to 20s and single. I do think 70% is about the best you can really do ($142k), but I agree 50% would be lavish. Throw in a regular dinner program, or some regular offsite meals & entertainment doesn't hurt. Since 274(e) expenses are fully deductible, IRS is basically paying for 35-40% of that annual picnic, holiday dinner, Caribbean retreat, etc. so it's smart for companies to shell out some real money for these outings.
- x0x0 11y ago
  Thanks! I think there's also about $500/pp of various fees in CA; stuff charged on the first $7k of income. tangent: security via obesity is a cool idea.