What is Full-Time Equivalents?
Full-Time Equivalents (FTE) is a calculated metric that adds all of the true full-time employees to the fractional values for all part-time employees, contractors, students and interns.
How to calculate Full-Time Equivalents
If you have 10 full-time employees, a bookkeeper who works 2 days each week, and a student who currently only works 3 days a week, the calculation would be as follows: 10 full-time employees + 2/5 for the bookkeeper + 3/5 for the student = 11 FTE
More about this metric
From a financial point of view, knowing what your FTE number is, allows you to more easily calculate a variety of performance metrics, such as Revenue per FTE.
Knowing how many FTEs you have is also important from a legal and government reporting aspect, with different opportunities and obligations regulating smaller and larger companies.
Read more about how to think about FTEs and what implications this has as you grow your business, check out this article from Small Business.
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