When hiring their first employees, many business owners make one of the most common mistakes – they plan costs based only on the gross salary.<\/p>\n
In reality, the actual cost of an employee to a company is significantly higher.<\/p>\n
\ud83d\udc49 Gross salary is only part of the total cost, and this mistake can create unexpected financial pressure already in the early stages of a business.<\/p>\n
In this article, we will look at:<\/p>\n
Gross salary is the amount agreed in the employment contract before taxes are applied.<\/p>\n
\ud83d\udc49 For example:<\/p>\n
However, the company\u2019s costs do not end there.<\/p>\n
In addition to the gross salary, the employer must pay mandatory state social insurance contributions.<\/p>\n
In a standard case:<\/p>\n
In certain situations, different rates may apply:<\/p>\n
\ud83d\udc49 Therefore, actual costs may vary depending on the employee\u2019s status.<\/p>\n
Assuming a standard employer contribution rate of 23.59%:<\/p>\n
| Gross salary<\/th>\n | Employer contributions<\/th>\n | Total cost<\/th>\n<\/tr>\n<\/thead>\n | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| \u20ac1,000<\/td>\n | \u20ac235.90<\/td>\n | \u20ac1,235.90<\/strong><\/td>\n<\/tr>\n| \u20ac2,000<\/td>\n | \u20ac471.80<\/td>\n | \u20ac2,471.80<\/strong><\/td>\n<\/tr>\n | \u20ac3,000<\/td>\n | \u20ac707.70<\/td>\n | \u20ac3,707.70<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n | \ud83d\udc49 An employee typically costs a company around 24% more than the gross salary<\/strong>.<\/p>\n In addition to base salary, employees may receive:<\/p>\n \ud83d\udc49 These payments are part of salary and are taxed in the same way as regular wages.<\/p>\n This means:<\/p>\n If an employee receives a \u20ac100 gross bonus<\/strong>:<\/p>\n \ud83d\udc49 Even a small bonus increases total costs beyond the paid amount.<\/p>\n In addition to salary-related expenses, companies often incur additional costs:<\/p>\n \ud83d\udc49 These costs are not taxed in the same way as salary but significantly increase total employee costs.<\/p>\n In Latvia, employers must also pay a business risk state fee.<\/p>\n \ud83d\udc49 This fee is \u20ac0.36 per employee per month<\/strong>.<\/p>\n Although small per employee, it is often overlooked in cost planning.<\/p>\n If a company has:<\/p>\n \ud83d\udc49 The total impact becomes noticeable over time.<\/p>\n When planning employee costs, it is recommended to increase the gross salary by at least 25%<\/strong> to estimate the total cost.<\/p>\n \ud83d\udc49 This helps to quickly understand the budget and avoid unexpected expenses.<\/p>\n The cost of an employee to a company is always higher than the gross salary.<\/p>\n It consists of:<\/p>\n \ud83d\udc49 Therefore, when planning employee costs, it is important to consider the total cost<\/strong>, not just the salary stated in the contract.<\/p>\n If you want to understand real employee costs, avoid unexpected expenses, and optimise your payroll structure, contact us – we will help you evaluate and organise your payroll and cost structure professionally and efficiently.<\/p>\n","protected":false},"excerpt":{"rendered":" When hiring their first employees, many business owners make one of the most common mistakes – they plan costs based only on the gross salary. In reality, the actual cost of an employee to a company is significantly higher. \ud83d\udc49 Gross salary is only part of the total cost, and this mistake can create unexpected […]<\/p>\n","protected":false},"author":5,"featured_media":589,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[3],"tags":[],"class_list":["post-588","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles"],"acf":[],"_links":{"self":[{"href":"https:\/\/amberfy.lv\/en\/wp-json\/wp\/v2\/posts\/588","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/amberfy.lv\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/amberfy.lv\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/amberfy.lv\/en\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/amberfy.lv\/en\/wp-json\/wp\/v2\/comments?post=588"}],"version-history":[{"count":5,"href":"https:\/\/amberfy.lv\/en\/wp-json\/wp\/v2\/posts\/588\/revisions"}],"predecessor-version":[{"id":606,"href":"https:\/\/amberfy.lv\/en\/wp-json\/wp\/v2\/posts\/588\/revisions\/606"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/amberfy.lv\/en\/wp-json\/wp\/v2\/media\/589"}],"wp:attachment":[{"href":"https:\/\/amberfy.lv\/en\/wp-json\/wp\/v2\/media?parent=588"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/amberfy.lv\/en\/wp-json\/wp\/v2\/categories?post=588"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/amberfy.lv\/en\/wp-json\/wp\/v2\/tags?post=588"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}} |