What is Full-time Equivalent FTE & How to Calculate It

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. (For a year, that is 2,080 hours with 40-hour workweeks and 1,560 hours with 30-hour workweeks, which is considered full-time for ACA reporting). FTE stands for full-time equivalent and is used by businesses to calculate the total number of full-time hours worked within their business among all employees.

Using a Full-Time Equivalent Calculator

FTE is a powerful tool that helps organizations manage their workforce, plan budgets and measure performance. By standardizing the number of hours worked and comparing them to a full-time work week, FTE provides valuable insights essential for effective business management. By understanding FTE and how it is calculated, organizations can optimize their human resource management and enhance their competitiveness in a dynamic business environment. A full-time position would equate to around 30 to 40 hours per week for most employers. If a company considers 40 hours per week as the basis for a full-time position, then anyone working an amount of hours below this range is considered a part-time employee.

FTEs calculator for the Paycheck Protection Program (PPP)

The first step in calculating FTE is to make a complete list of all employees. Also, do not include yourself as the business owner, unless you are paid a salary and receive a W-2. If you’re concerned about staying compliant, consider software such as Homebase that will track your employee hours, provide reporting, and can also prepare your time sheets for payroll. Your FTE calculations must be accurate for IRS and Department of Labor (DOL) reporting.

How to work out FTE for your company

When calculating your FTEs for basic accounting or business purposes, the simplest way to do it is to divide total annual work hours for all employees by an average full-time annual work schedule. All the above-mentioned factors end up costing the company something and affecting its bottom line. For a business, specifically those with a large number of part-time workers, converting worked hours into FTEs is important in helping the company know how many full-time employees the part-time workers are equal to. Interns may or may not be included in Full Time Equivalent calculations, depending on their employment status and your organization’s policies.

This insight allows you to address staffing imbalances, reducing potential burnout and enhancing productivity. Three of them work full-time (40 hours per week respectively) and the rest work 10 and 5 hours in total. Proof of FTE is evidence required for Paycheck Provider Program (PPP) Loan Forgiveness. The PPP is part of the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act. Under the PPP program, businesses can apply for funding to keep employees on payroll and cover certain operational costs.

Planning a new project and making estimates can be tiresome, especially when you have employees with different types of contracts (part-time, full-time, and freelancers) working for your company. FTE calculations make it easier for you to https://www.bookstime.com/ assign different personnel to different projects or specific tasks based on their overall performance and contribution to your company. Next, divide the above number by the ideal number of work hours for a full-time employee per month.

To determine your eligibility for the small-business tax credit, you’ll need to use a different system for counting FTEs. First, count the total number of employees who worked at your fte meaning company at any time during the year, both full-time and part-time. It is sometimes useful to know how the total number of full-time and part-time employees are working in a business.

How to Calculate Full-Time Equivalent

Whether you are a professional looking for career growth, an employer looking to attract and retain the best talent, or an educational institution looking to prepare students for tomorrow’s challenges,… You’ll find the answers to all these questions and more and learn how to calculate FTE step-by-step. Learn how to create professional-looking invoices to ensure customer loyalty and timely payments. Motivate your clients to pay on time by implementing a few, simple changes to your invoicing habits.

• An FTE salary is an employee salary converted into a full-time equivalent salary within a full year, regardless of whether the said employee holds a full-time or part-time position.
• Read our employer’s guide to find out more about different types of insurance you can offer your employees.
• That said, if interns are classified differently or their hours are not counted toward operational capacity, they should be excluded from your FTE calculations.
• As the name implies, calculating Full Time Equivalent involves converting the working hours of part-time or temporary employees into the equivalent of a full-time position.
• For example, if a part-time employee works 20 hours per week and standard full-time hours are 40, their FTE would be 0.5.

Why do companies use FTE?