Payroll for startups
- Months of runway at this burn
- 16
- Monthly cost of one hire, salary plus taxes and benefits
- $11,242.92
- Monthly payroll, loaded
- $44,971.67
- Gross burn per month
- $64,971.67
Every figure on this page is computed from the inputs you enter, by the method stated below it. Runwayze supplies two constants and cites both: the employer's share of Social Security and Medicare from IRS Topic 751 as the default payroll tax rate, and the FUTA rate and wage base from IRS Topic 759 in the notes. The defaults are a worked example, not a benchmark.
The figures above start from a worked example (16). Change any input and the answer updates as you type.
Download the Payroll for startups worked example (CSV)
This is a payroll for startups calculator that works out what the team costs each month and how long the cash lasts at that cost. The people on payroll and the average salary give the salary line; the employer's payroll taxes and the benefits on top give the loaded payroll; the other monthly spend gives the gross burn; the revenue collected gives the net burn; and the cash in the bank divided by the net burn is the months of runway. The default tax rate is the employer's share of Social Security and Medicare from IRS Topic 751; everything else is your own number.
The salary line is not the cost of a hire
A $110,000 salary costs the company more than $110,000: the employer's share of Social Security and Medicare goes on top, then federal and state unemployment tax, then health, retirement and the payroll provider's fee. On the worked example the taxes and benefits add 22.65% to the salary, so one hire costs $11,242.92 a month and four cost $44,971.67. Enter your own benefits share; the tool publishes no benchmark.
Burn is payroll plus everything else, less what comes in
Gross burn is the loaded payroll plus the other monthly spend, $64,971.67 on the worked example, and payroll is 69% of it, which is the usual shape of an early team. Net burn takes off the revenue actually collected, $10,000 here, to leave $54,971.67 leaving the bank each month. Net burn is the number the runway is worked from; gross burn is the number a hiring plan changes.
Runway is cash over net burn, and it moves with every hire
With $900,000 in the bank and $54,971.67 of net burn the worked example has 16 months of runway and $240,340 left after twelve. Add a hire and the runway shortens by their loaded cost every month; collect more revenue and it lengthens. Pro keeps each hiring plan as a scenario and compares them side by side, so the plan the board approves is the one whose runway was read before the offer went out.
Payroll for startups: common questions
Is this a free payroll for startups calculator?
Yes. Enter the headcount, the average salary, the employer tax and benefits rates, the other spend, the revenue and the cash, and it works out the loaded payroll, the gross and net burn, payroll's share of burn, the months of runway and the cash left after a year, with no account.
What employer payroll tax rate should a startup use?
The default is the employer's share of Social Security and Medicare, 6.2% and 1.45%, from IRS Topic 751; add federal unemployment tax at 6.0% on the first $7,000 of each employee's wages, less the credit of up to 5.4% for state unemployment tax paid (IRS Topic 759), and your state's own rate. Your payroll provider has the exact figures.
How many months of runway should a startup have?
That is a judgement for the founders and the board, not a figure the tool publishes; the calculator shows what the cash buys at the burn you run and how each hire moves it, so the judgement is made on the number rather than a feeling.