fte accounting

While full-time employees usually work the same hours each week, hours for part-time employees can vary from week to week, so be sure to look at each week to view the actual hours worked. If you currently employ both full and part-time employees, you need to determine how many FTE employees you have. An FTE employee is not necessarily a single employee; it may be a combination of several part-time employees who, when their hours are added together, create a full-time equivalent, or FTE, employee. For instance, if your full-time workweek is 40 hours and you have two part-time employees who work 20 hours each week, when their hours are added together, they create one FTE.

It’s used by businesses to figure out how many full-time or part-time employees are in a company and for organizing projects. It’s an important element to accounting to determine employee wages, hours of service, and your company’s expenses. And you have 3 part-time employees – Jack who works 20 hours per week, Leva who works 15 hours per week, and Julia who works 5. A full-time equivalent (FTE) is a unit of measurement used to figure out the number of full-time hours worked by all employees in a business.

What is full-time equivalent (FTE)?

Full-Time Equivalent (FTE) is a tool to use when calculating the costs of a project or forecasting employee hours and salaries. To identify the FTE for part-time positions, divide the total number of part-time hours worked by the number of hours worked by one full-time worker. In our example, we will divide the total hours worked by Employees D and E by the number of hours worked by Employees A. The 2,080 figure can be called into question, since it does not include any deductions for holidays, vacation time, sick time, and so forth. Alternative measures of FTE that incorporate these additional assumptions can place the number of hours for one FTE as low as 1,680 hours per year. The exact number will depend on the country where the employment is occurring, since the number of holidays varies by country.

When your executives, board, and trustees try to answer these questions, they should do so with a complete view of up-to-date financial information. For example, if you have a project that is estimated to require 60 hours of work, you would need 60/40 or 1.5 FTEs to do it. Jack, Leva, and Julia would receive the same salary if they worked full time, but because they are not, their salaries are a part of this full-time salary. As you’ll understand by the end of this article, there are a number of situations when knowing what FTE is and how to calculate it may come in handy. As a business owner or project manager, sooner or later you will come across the FTE abbreviation. Both company leaders and HR can evaluate job descriptions, projects, or virtually any other work need and determine the FTE number necessary to successfully complete a particular job.

Identify the part-time FTE

The entire calculation will be much smoother if you’re using payroll software or a payroll service provider as you can use your payroll reports to obtain the information needed. Entering data into multiple systems or spreadsheets that don’t talk to each other is risky. If your nonprofit relies on systems that aren’t automated or integrated, it can take extra time to export data from one system and then manually import it into another. Additionally, manual data entry can introduce dreaded typographical and other painful errors.

fte accounting

So, workers who work 20 hours in a standard 40-hour workweek are 0.5 FTE because they’re working half the time of full-time workers. When asked about their organization’s biggest internal challenges for 2023, nonprofit finance leaders ranked manual, time-consuming reporting processes https://www.bookstime.com/ at the top of the list. Many nonprofits deal with manual accounting processes, spending hours and even days manipulating data in spreadsheets to create financial reports. Many nonprofit finance teams are facing growing complexity while operating with limited staff and resources.


As your nonprofit grows in size and mission, you need flexible fund accounting software to manage financial complexity and organizational structures. Fortunately, finance teams that take advantage of modern fund accounting solutions can achieve greater visibility with real-time data across multiple entities, dispersed teams, and multiple locations—even with limited staff. FTE is an important calculation for businesses that need to keep track of organizational costs, efficiency, overtime hours, work output, and the overall strain on certain departments. If you’re not sure where to start to track FTE, consider using QuickBooks Time , which helps organize employee hours and delivers helpful insights into your FTE calculation. With these tips, you can run a smoother business operation with a deeper level of understanding into your labor costs and needs now and in the future. For example, an employee who works a full-time, 40-hour week would equal 1.0 FTE.

FTE has a bunch of uses and different ways to calculate it depending on your situation. It’s a simple calculation to make and you just need to know your employee details and go from there. Knowing your accurate FTE will help determine responsibilities for employees. This employee list should include both the employee name and number of hours worked. For example, 1.0 is typically the FTE representation of an individual’s full work/school day, while 0.5 would indicate half of the original figure, generally in reference to the workday.

The PPP is part of the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act. Under the PPP program, businesses can apply for funding to keep employees on payroll and cover certain operational costs. Businesses that want to apply for PPP loan forgiveness can submit eligible operational costs and proof of FTE.

Data entry makes poor use of employee time and talent and often forces nonprofits to hire more people than necessary to complete mundane tasks—time that could be better spent on strategic analysis. To qualify for this program, the company can’t have more than 500 full-time employees or FTEs. So, if your company employs 900 half-time employees, it would still be eligible for the program because 900 employees working half-time would be equal to 450 FTEs.

Mary Girsch-Bock is the expert on accounting software and payroll software for The Ascent. Calculating FTEs is also required for any small business that currently works with the federal government in a professional capacity, as the submission of an FTE report is a required part of most federal government contracts. fte accounting The chart below displays the number of weekly hours worked with the corresponding FTE under the standard 40 work-week. As a small business owner you have more important things to do than to keep your own books. While you focus on growing your business,  our team at FTE is ready to take this task off of your hands.

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