Find out more about how full-time hours can be calculated. Includes frequently asked questions.
Updated on January 24th, 2022
The SMB Guide is reader-supported. When you buy through links on our site, we may earn an affiliate commission. Learn more
FTE is an acronym that stands for full-time equivalent. An FTE calculation is important because it represents the number of full-time working hours that your business is paying for.
Below, you can learn how to calculate full-time employment equivalent numbers for your employees and use that information for scheduling and budgeting. FTE calculations generally assume that a working year has 52 weeks and that a full-time worker is someone who works a 40-hour week. A healthcare worker can be considered full-time if he or she works an average of at least 30 hours per week.
How to Calculate FTE Equivalent:
- Combine total hours worked for full and part-time employees over the same period (year or month).
- Next, divide this sum by the number of hours worked over that period.
- The result is your full-time equivalent.
Understanding FTE can help you to save money on staffing and maximize the effectiveness of your full-time staff. Your FTE calculation will also be very important when you are filing your corporate taxes.
You can learn more about other aspects of small business payroll by reading our article on how to do payroll.
FTE Calculation FAQs:
Once I have calculated FTE for my business, what can I do with that information?
You can use your FTE numbers to reveal how much money you are spending on part-time/casual staff. Your FTE results may show that you are either overusing or underusing your part-time staff.
What does the IRS classify as a large employer?
You must employ over 50 full-time employees during the calendar year to be classified as a large employer.
What is a full-time equivalent employee?
According to the IRS, a full-time equivalent employee is a group of employees who individually may not be employed full-time, but who comprise a full-time workforce.