What Percentage of Gross Receipts Should Labor Be?

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Labor should always be a certain percentage of your gross receipts. Find out what percentage of gross receipts labor should be with help from an accounting professional in this free video clip.

Part of the Video Series: Accounting & Finance
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Video Transcript

Hi, I'm Lori Greer, and I'm here to discuss what percentage of gross receipts should be labor. Payroll is generally a large part of the business costs for both small and large companies, especially in retail and professional service industries such as restaurants. This is due to many businesses relying on their staff to deliver sales through interactions with customers. Payroll percentage or the percentage of payroll in sales is the ratio of a business of sales consumed by the expenses of paying employees. According to experts, a sound goal for most businesses' payroll percentage is 30 to 38 percent of gross sales. If your payroll costs you as much as 50 percent, you could find yourself struggling more frequently. Again, I'm Lori Greer and we just explained what percentage of gross receipts should be labor.


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