Payroll percentage of sales?

Discussion in 'Business Operations' started by LawnGuyFromTheFuture, Oct 10, 2006.

  1. LawnGuyFromTheFuture

    LawnGuyFromTheFuture LawnSite Member
    from Midwest
    Messages: 23

    For LCO's with one or more employees, what is an average percentage of gross sales for payroll?
    I'm talking about labor and payroll taxes, not accounting or cost of having the payroll done.
  2. rodfather

    rodfather LawnSite Fanatic
    Messages: 9,501

    Ranges from 25 - 50% or so depending
  3. Gene $immons

    Gene $immons LawnSite Bronze Member
    Messages: 1,028

    I try to have payroll kept at 1/3 of sales, or less.
  4. JimLewis

    JimLewis LawnSite Fanatic
    Messages: 6,876

    Man, that is a loaded question. It's going to vary wildly from company to company because it depends on what kind of work you do. For instance, our company's annual sales this year are going to be just over $1,000,000. And our labor for the year will be about $300,000 to $325,000. But our company does more dollars per year in design/build, new installs, new irrigation, etc. than we do in maintenance. So a lot of the remaining $700,000 in sales is just in product alone. For instance, we'll maybe spend $50,000 to $100,000 in rock, boulders, and flagstone this year. We'll spend the same amount in irrigation supplies. And again in planting materials, etc. And although the income we received from those kinds of jobs is counted in our overall gross sales, a lot of it is really just money that we took from Peter and paid to Paul. That is, it's not really income. It's counted as gross sales but it kind of throws things off. Compared to a company who did stricly maintenance, our percentage of gross sales / labor is going to be way off.

    If we did just maintenance, then labor would obviously be a MUCH larger percentage of our annual gross sales.

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