It’s common when budgeting or managing personnel resources for projects. Essentially, it relates to the actual hours both full-time and part-time employees work during a regular workweek. There are some exceptions when calculating FTE for the purposes of the small business tax credit.
Your FTE number is also an important factor in determining if you’re considered an applicable large employer. An applicable large employer means that you have 50 or more full-time employees or a combination of full- and part-time with a total fte meaning finance FTE of 50. FTE refers to calculating the number of hours instead of the number of employees to forecast costs based on a full-time workweek. A full-time employee can be defined by a 40-hour workweek, 8-hours per day, 5 days per week.
Calculating FTEs for the Small Businesses Tax Credit
An FTE of 1.0, for example, corresponds to the hours worked in a day for a full-time employee. Consequently, the FTE for a part-time employee working 20 hours a week would be 0.5. Imagine you are a human capital manager who has lost four employees and needs to replace their hours. Two of these employees worked full-time (40 hours per week), employee three worked 20 hours per week, and employee four worked 15 hours per week.
In this article, we will explore the meaning of FTE from a U.S. perspective, how it is calculated and the purposes of doing so as an employer. The full-time equivalent is an indicator that answers many of the questions Human Resources departments need answers to. This, therefore allows them to make better decisions regarding personnel management. For example, imagine the project will involve designing a new website.
