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The Importance of Overhead & Profit by Sal Alfano If you want to keep your head above water in contracting, you need to understand the concepts of overhead and profit. Tracking these figures will enable you to make intelligent decisions about bidding, business expansion, and your company's financial health. The year's end is a good time to sit back and reflect on these matters— Common Overhead Costs Insurance Personal liability Property liability Workers' compensation Motor vehicle Land and buildings Tools and equipment Payroll Taxes and Benefits FICA FUTA and state unemployment tax Employee benefits compensation is a percentage of payroll: the more employees, the higher the payroll, the bigger the premium. Your insurance agent should be able to give you a pretty good idea of what percentages apply in each case. Other