How To Calculate True Labor Costs

If you’re running a service or construction business, you know that one of your top priorities is to track your profits per job accurately. Determining labor costs is often one of the most significant expenses to your bottom line. So what is the actual cost of labor, and how can you measure it?

Work hours

How many hours do your employees work, and at which job sites? First, it’s crucial to identify the proper amount of work hours allocated to each job. An excellent mobile time-tracking system equipped with job costing and GEO/job fencing will help you track and give time worked per job.

Wage Entitlements

Identifying the total number of work hours broken down by each job isn’t your only challenge. If an employee is entitled to overtime pay, shift differentials, prevailing wages, or other additional wages, knowing at which job they accumulate those are crucial.

Employer taxes

As an employer, you’re responsible for paying federal and state taxes above your employees’ salary (FICA, FUTA, and SUTA). They must be accounted for to calculate your profits correctly.

Workers’ Comp

Another cost you’re responsible for paying is Workers’ Comp Insurance. If your employees work on different tasks, your premium costs may fluctuate based on the functions. If you’re signed up for a Pay-As-You-Go policy that integrates with your payroll system, you could save money and know the actual premium cost for each job.

Job Costing Done Right

For a business to flourish, it’s essential to calculate the profits and losses for each job. An automated time-and-attendance system that integrates seamlessly with payroll can accurately provide a clear picture of labor costs per job. Fingercheck provides small businesses with one central platform to manage all the crucial aspects of employee time-tracking, scheduling, and payroll, with powerful reporting features that enable you to calculate costs per job and location correctly.