If you’re responsible for the HR budget in your company, then you’ll want to read this guide!
In it, we’ll discuss how to work out costs for Human Resources, and what to include in your budget. We’ll also provide a sample HR budget so that you can see what everything looks like put together. And finally, we’ll give you some tips on how to plan your HR budget. So let’s get started!
What is an HR budget?
An HR budget is a financial plan that outlines the costs associated with running a human resources department. This can include salaries, benefits, training, and other expenses. Essentially, an it is a tool that helps you to understand the financial impact of your decisions when it comes to human resources.
Cutting edge payroll software
- Powerful and easy to use
- HMRC & RTI compliant
- Used by payroll pros
The CRM platform to grow your business
- Great for entrepreneurs
- Powerful data analytics
- Manage sales and data
Powerful web builder and advanced business tools
- Great for startups
- Powerful web page builder
- E-commerce available
Supercharged content planning
- Great for marketing
- Better than lists or sheets
- Manage social media
Create a new website in 10 minutes. Easy.
- Launch your website fast
- Powerful data intuitive
- No coding skills needed
HR budget items list
When you’re creating your HR budget, there are a few key items that you’ll want to include outside contractors, pension contributions, and other perks that you offer to your employees.
You’ll also need to factor in the cost of training. This can include both internal training for your HR staff, as well as any external training courses that they take.
Finally, don’t forget to account for miscellaneous expenses, like office supplies and travel costs.
List of HR budget components
- Salaries
- Benefits
- Training
- Payroll costs
- Office supplies
- Travel costs
- Technology
- HR & Payroll software
- Advertising
- Legal fees
- Recruiting fees
HR budget planning
Once you’ve got a handle on all of the costs associated with running your HR department, it’s time to start planning your document.
How to prepare an HR budget
- The first step is to establish a baseline budget
This will give you a starting point to work from as you make your budget for the upcoming year.
- Next, you’ll want to look at your revenue and expenses from the previous year
This will help you to identify any trends that you can use to predict your costs for the upcoming year. For example, if you notice that your training costs have been increasing each year, you can budget accordingly.
- Once you’ve looked at the past, it’s time to start planning for the future
Begin by setting some goals for your HR department. What do you want to achieve in the next year?
- Once you’ve got some goals in mind, you can start to allocate funds to specific area
For example, if one of your goals is to improve employee retention, you might budget for more training or better benefits.
HR budget as a percentage of revenue
One common question that people have when it comes to HR budgets is what percentage of their overall budget should be allocated to HR. It will vary depending on the size of your company, the industry you’re in, and a number of other factors.
But typically, HR budgets are between two and four percent of total revenue. So if your company makes £100,000 in revenue, you would have an HR allowance of £4,000.
Sample HR department budget template
If you need a little help getting started with your HR budget, don’t worry! There are plenty of resources available to you. There are numerous templates that you can use, or you can even find software that will help you to create and manage your budget.
Below is a sample template which can be saved into PDF format, or copied into a spreadsheet for use in Excel.
| Section | Item list | £ cost |
|---|---|---|
| Company Name: | < Name of company > | – |
| Department: | Human Resources | – |
| Budget Year: | YY/YY | – |
| Start Date: | DD/MM/YY | – |
| End Date: | DD/MM/YY | – |
| Revenue: | £ | – |
| Salaries: | ||
| Position 1 | £ | |
| Position 2 | £ | |
| Contractors | £ | |
| Etc. | ||
| – | – | |
| Benefits: | ||
| Medical / dental / vision | £ | |
| Pension / Auto enrolment | £ | |
| Life insurance | £ | |
| Disability insurance | £ | |
| Paid time off (PTO) | £ | |
| – | – | |
| Training: | ||
| Internal training courses | £ | |
| External training courses | £ | |
| – | – | |
| Payroll costs: | Line item(s) | £ |
| Advertising: | Line item(s) | £ |
| Legal fees: | Line item(s) | £ |
| Recruiting fees: | Line item(s) | £ |
| Office supplies: | Line item(s) | £ |
| – | – | |
| Technology: | ||
| HR & Payroll software | £ | |
| Computers / printers | £ | |
| Telephones | £ | |
| – | – | |
| Travel Costs: | Line item(s) | £ |
| Misc. Expenses: | Line item(s) | £ |
| Total Budgeted Amount: | £__,___.00 GBP per year | This is __% |
HR budget software
Budgeting for HR doesn’t have to be a daunting task. With the right tools, it can be surprisingly easy. Software can help you to track your costs, create forecasts, and make sure that you’re staying on track.
Some software packages include:
- QuickBooks
- Xero
- FreshBooks
- Wave Accounting
- Sage 50cloud
- Zoho Books
Pricing for these tools starts at around £15 per month, with more advanced features costing more. However, many of these tools offer free trials, so you can try them out before you commit to anything.
When it comes to choosing budget software, there are a few things you’ll want to keep in mind. First, think about what features you need. Do you need something simple, or do you need something with more advanced features? Second, consider your price range. There are budgeting tools available at all different price points, so you’ll want to find one that fits into your costs.
Finally, take some time to read reviews of different budgeting tools. This will help you to get a better idea of which ones are the best fit for your needs.
Conclusion
We hope this guide has been helpful in getting you started with HR budgeting! Remember, the most important thing is to calculate your costs accurately and plan for changes. With a little bit of effort, you’ll be able to put together a budget that works for your company.
FAQ
An HR budget is a financial plan that outlines the costs associated with running a human resources department.
The amount you should budget for HR will vary depending on the size of your company, the industry you’re in, and a number of other factors. Typically, HR budgets are between two and four percent of total revenue.
There are a number of things you may want to include in your HR budget, such as salaries, benefits, training, payroll costs, advertising, and legal fees.
Yes, there are numerous software packages available that can help you to track your costs, create forecasts, and make sure that you’re staying on track. Some popular options include QuickBooks, Xero, FreshBooks, Wave Accounting, Sage 50cloud Pastel Partner, and Zoho Books.
Here are a few tips to keep in mind when creating your HR budget:
• Calculate your costs accurately
• Plan for changes
• Use budgeting software to help you track your expenses
• Read reviews of different budgeting tools before choosing one
• Keep your company’s size and industry in mind when determining your budget. typically, HR budgets are between two and four percent of total revenue
• Make sure to include all relevant costs in your budget, such as salaries, benefits, training, payroll costs, advertising, and legal fees
• Consider using budgeting software to help you manage your finances. There are many different options available, so be sure to find one that meets your needs