FTE (full-time equivalent)

FTE stands for full-time equivalent, and it’s a way for businesses to measure how many full-time employees they have, even if some of their team members are working part-time.

Homebase Team

Min Read

What is an FTE (full-time equivalent)?

FTE stands for full-time equivalent, and it’s a way for businesses to measure how many full-time employees they have, even if some of their team members are working part-time. Instead of counting only headcount, FTEs give you a clearer view of your staffing levels based on hours worked.

For small business owners, calculating FTEs is useful for everything from scheduling and budgeting to understanding eligibility for benefits or tax credits. It’s beneficial when managing a team that includes a mix of full-time, part-time, and seasonal workers.

Why FTEs matter for small businesses

Knowing your FTE count helps you:

Forecast labor costs more accurately
Create balanced shift schedules based on workload and staffing needs
Determine eligibility for certain tax credits or federal programs (like the Affordable Care Act)
Evaluate productivity and resource allocation

For example, if you run a business with ten employees but half of them work 20 hours a week, your FTE count will be much lower than your headcount, giving you a more realistic picture of your labor coverage.

How to calculate FTE

The standard FTE is based on a 40-hour workweek. To calculate FTE:

Add up all the hours worked by your team in a week
Divide that number by 40

For example:

You have two full-time employees working 40 hours = 2 FTE
You have three part-time employees working 20 hours = 1.5 FTE
Total FTE = 3.5

You can also use this same formula for monthly or yearly totals; just adjust the base number (e.g., 40 hours/week × 52 weeks = 2,080 hours/year).

When do you need to track FTEs?

While not every business is required to calculate FTEs regularly, you’ll need to know your FTE count for:

Affordable Care Act (ACA) compliance – Businesses with 50+ FTEs may be subject to ACA requirements
Eligibility for certain tax credits or loan programs – Including the Employee Retention Credit or Paycheck Protection Program (PPP)
Workforce planning and scheduling – To guarantee coverage during busy periods or across multiple locations

Even if it’s not legally required for you, tracking FTEs is a smart practice for managing your team effectively.

Tips for using FTEs in scheduling and planning

Use FTE calculations to determine how many people you need to staff key shifts
Combine FTE data with labor cost reporting to optimize your payroll spending
Plan ahead for hiring by monitoring FTE trends over time

When you have a clearer sense of your team’s total capacity, you can make smarter staffing, scheduling, and budgeting decisions.

How Homebase helps with managing FTEs and scheduling

Homebase makes it easy to track employee hours, calculate staffing needs, and build smart schedules; no spreadsheets required. With built-in time tracking, scheduling, and labor reporting tools, you’ll always know how your coverage compares to your staffing targets.

With Homebase, you can:

Automatically calculate hours worked by all employees
Monitor your labor costs in real time
Forecast staffing needs based on historical hours and scheduling trends
Create balanced, fair shift schedules that match your FTE goals

Explore Homebase’s employee scheduling tools to manage your team more efficiently, reduce scheduling gaps, and stay ahead of labor planning.

‍

FAQs

No items found.