When a startup employee negotiates a $100,000 salary, the company's actual cost for that person is closer to $130,000–$145,000. The gap between the salary number and the fully loaded cost is one of the most consistently underestimated line items in early-stage financial models.
Getting this wrong doesn't just affect your expense projections — it affects your runway calculation, your hiring plan, and ultimately how many people you can afford to bring on before your next funding round.
What's in the fully loaded cost
The fully loaded cost of an employee includes their base salary plus every other cost the company incurs to employ them. The major components are payroll taxes, benefits, and equipment.
Payroll taxes in the US include the employer's share of Social Security (6.2% of wages up to the annual wage base), Medicare (1.45% of all wages), federal unemployment tax (FUTA, typically 0.6% after credits), and state unemployment tax (SUTA, which varies by state but is often 2–5% of wages up to a state-specific wage base). Together, these typically add 8–12% to your base salary cost.
Benefits vary widely depending on what you offer, but a competitive benefits package for a startup commonly includes health insurance (employer contribution of $500–$1,200 per month per employee depending on plan and coverage), dental and vision (typically $50–$100 per month), a 401(k) match if you offer one, and paid time off (which has an implicit cost even if it's not a direct cash outlay).
Equipment and tooling costs — a laptop, software licenses, a desk if you have an office — add another $2,000–$5,000 in the first year for most roles.
A practical example
Take a software engineer with a $120,000 base salary. Payroll taxes add roughly $10,000–$12,000. Health insurance (employer portion) adds $8,000–$12,000 per year. A 401(k) match at 3% adds $3,600. Equipment and setup costs in year one add $3,000–$5,000. Total fully loaded cost: $145,000–$153,000 — roughly 20–28% above the base salary.
For a team of 10 engineers at $120,000 each, the difference between budgeting on salary versus fully loaded cost is $250,000–$330,000 per year. That's a meaningful number when you're managing runway.
How to use this in your model
The simplest approach is to apply a fully loaded cost multiplier to each role. A multiplier of 1.25–1.30 is a reasonable starting point for most US-based startups with a standard benefits package. If you offer more generous benefits or are in a high-tax state, use 1.35.
For more precision, build out the components separately: base salary, payroll taxes as a percentage of salary, a fixed monthly benefits cost per employee, and a one-time equipment cost in the hire month. This gives you a more accurate picture and makes it easier to model the impact of benefits changes.
Horizon's Staff page lets you enter base salary and applies a configurable overhead multiplier to calculate the fully loaded cost that flows into your expense projections. Every hire you add automatically updates your burn rate and runway calculations.
Know what your people actually cost. It's the only way to build a hiring plan you can actually afford.