I've been looking at my financials and noticed that payroll is currently making up 37% of my gross sales for 2025, which includes my own salary. Is this percentage on the high side, and should I be factoring in my salary when considering payroll costs?
3 Answers
I suggest getting involved with national landscape associations and their state chapters. They can provide insights into what other companies allocate for payroll and help you understand the overall financial landscape. If you're thinking about passing your business down, connecting with others who’ve been there is invaluable. Plus, the conferences are often held in great locations where you can also enjoy a mini-vacation!
Typically, you wanna aim for around 30% of gross sales for payroll, not counting the owner's salary. I usually split my costs into thirds: one for payroll, one for operations, and one for myself. But it really varies from business to business. If your operations aren't too costly, 37% for payroll might not be that bad. As you grow, you might find your share of the profits decreases, since bigger companies can struggle with profit margins. But if you’re grossing around $100k, that split looks solid! Congrats on your success, by the way!
Thanks for the insight! I’ve been in the green industry for over 30 years, and I’m always eager to learn more. It's been a blessing to withstand the South Carolina heat, but I'm definitely feeling my age as my sons start taking on more work.
There's no one-size-fits-all answer, as payroll percentage can vary significantly based on location and the nature of your business. It sounds like you're in a decent range, though. Are you servicing any debt? And how big is your company?
I hear you on the lack of a perfect formula. We’re a small landscaping business doing between $450k and $550k a year, with $40k of debt for equipment. We're based in the Southeastern USA, so I guess that plays a role too.
That sounds like a fantastic idea! I appreciate the suggestion; I’ll definitely look into it.