You’ve made your decision: You’re going to hire your first or second employee. You might already have one but you’ve realised you may need to expand further. Did you know that there’s more cost to your business than just wages when hiring additional staff? Obvious things that people think about when they hire employees is, “I’m going to have to pay their salaries”. Salaries could be your hourly or annual rate for having someone on board.
1. Payroll
One thing you may not realize is that now if you have employees you’re going to have to process payroll; either weekly, fortnightly or monthly. However often you pay your employees, someone will need to do the work to process the payroll and make sure that all of the employer obligations are being met. For example, withholding the right amount of tax from your employee’s pay and paying them the correct amount of superannuation. The administrative cost of hiring employees is something that is not often thought about.
2. Staff cost
The second thing I want to point out as a cost of hiring employees, is where are they going to work? Unless you’re planning on having your staff work remotely, you will need to have a space for them to work from. In this space, it will need to be fitted out with furniture, desks, internet, laptop/computer, printer, office supplies, paper – whatever the employee needs in order to get their work done. They will need the tools and equipment to do their jobs, and this is often paid for by the employer.
In my experience, I’ve had staff for over two years. The first set of people that I hired I was fortunate that the roles were small enough that we could all work remotely, with just internet meetings or video call meetings happening periodically. I was fortunate, as a business owner, because I didn’t have to provide my staff with a desk or computer because they already had their own.
However, things were a bit different in my third year in business. I had staff turnover, and as new employees came on, I added additional staff roles to Balance Tax Accountants. My new staff didn’t have their own computers and didn’t have their own place to work. Also, what I found was that when we were growing we got more done when we worked together. I had to buy computers, office supplies, and find a space that we could work together from; whether that was a co-working space or whether that was an actual leased office space. These are all things that you don’t necessarily think about when you hire staff, I for sure didn’t!
3. Insurance
The last thing I want to talk to you about when you hire staff is insurance. Because I had employees, I was required by law to have worker’s compensation. Worker’s compensation insurance isn’t something that I necessarily had when it was just me working in my business by myself. And so, this is something I had to go out and make sure that I had the right amount that I needed, based on local laws.
I also needed to buy insurance to cover the equipment, because I had bought all these computers and I had leased an office. I needed insurance in case we had damage done to our equipment, in case they were stolen, in case we couldn’t work in the office or we had a business interruption that prevented us from servicing our customers. Insurance is the third cost that people often don’t think about when they’re hiring employees.