I've heard that start-ups often write proforma budgets using a rule of thumb for figuring fixed costs (rent, utilities, fringe benefits, etc.) in other words costs that scale with headcount. The ratio I've heard is 1.5-2.0 times salary, depending on location. Is that reasonable?
I think multiplying payroll by a fixed figure won't be very accurate because some expenses, like rent, scale by number of people, not by salary.
But I agree that extensive navel-gazing trying to figure exactly what expenses will be incurred when is time-consuming, painful, and probably wildly inaccurate. I take a different approach altogether, and it works well for me:
My figures end up being amazingly accurate, and not too painful to create. Of course you then have to create a hiring ramp by job title, and decide what each position pays.
Yes, people generally use that kind of uplift. Beware that it is only a rule of thumb: some costs scale with salary, some don't, and given that often in startups you're paying below-market salaries you should try and get realistic numbers on office costs and any company size-driven taxes based on where you are located.
I think that you should never calculate costs like that. Take a good time to do a really detailed budget. But a budget is nothing if you don't have a at least 1 year business plan.
But for my experience, it is something like 2x the salary. You should see what you are providing (gas, car rental, healthcare, taxes, courses/year, xtmas salaries, vacations substitutes, travels, conferences). And you should have a spare invested fund for each employer of at least one salary (if they leave the company in many countries you have pay for 30 days and hire another person at same time to learn about the position). Well.. many things that you will definitely pass through and you will not lose your health to solve those things if you have good emergency funds.