Understanding the "Full Burden" Rate
The biggest mistake first-time founders make is assuming a $100,000 salary costs the company $100,000. In reality, that hire will typically cost your startup between $125,000 and $140,000 per year. This gap is known as the "Employee Burden."
What Makes Up the Burden?
For a US-based employee in the current environment, the burden is typically split into three primary buckets:
1. Statutory Taxes
FICA (Social Security & Medicare), FUTA (Federal Unemployment), and state-specific unemployment taxes. These usually total around 8-10%.
2. Voluntary Benefits
Health insurance premiums, 401(k) matching, and life insurance. Expect to pay $10k-$20k per head or roughly 10-15% of salary.
3. G&A Overhead
The laptop, the Slack seat, the Zoom license, and recruiting fees. This is often the "hidden" burn that kills startup runways.
How to Use This for Runway Planning
When building your hiring plan for investors, always use the fully burdened number. If you tell a VC you are hiring 10 engineers at $150k each, you must account for the ~$1.9M actual cash outlay, not the $1.5M base salary total. Failing to do this can result in a "phantom" $400,000 burn that shortens your runway by 2-3 months.
The 1.3x Rule of Thumb
If you're in a hurry, a safe "rule of thumb" in the current environment is to multiply any base salary by 1.3. This covers most taxes and decent benefits for a mid-market startup.