What to consider when hiring employees | North Advisory
X

We'd love to help you build a successful business and grow your personal wealth. Get in touch to book a free consultation.

    What you need to consider when hiring employees

    Posted by Northadvisory on October 13, 2021

    Smiling happy woman shaking hand of confident businessmanIt’s great to have a growing business. Increasing sales or new clients requesting your services, these are the things that make you feel confident that your venture is on an upward trajectory.

    But what happens when you have grown so much that you realise you can’t do it all on your own? There comes a time when you might have to think about hiring employees. And when that happens, do you know where to start?

    It’s important that you understand various aspects of being an employer and the obligations involved. Here, we look at what you need to consider when you hire someone.

    Man hands using laptop and calculatorCosts involved

    First and foremost, it’s critical that you understand the costs associated with hiring employees. It’s not just making sure that you can cover an extra wage… there are many other costs incurred when you take on staff.

    When you are calculating the true cost of employment, you also need to think about…

    • Recruitment costs – will you place a job ad or use a recruitment agency?
    • Training costs – what time and resources will they need for training?
    • PAYG Withholding – as an employer, you are responsible for withholding amounts from payments in order for your employee to meet their tax liabilities.
    • Superannuation – you need to pay compulsory employer superannuation contributions.
    • Workers compensation insurance – in NSW, it is compulsory to have a workers compensation policy if you employ workers or contractors.

    Plus, depending on your business, you might need new tools and equipment, office furniture, upgrades to software to allow additional user profiles… or maybe even a larger space to run your business. Not to mention the cost of your time involved in finding the right person to join you.

    Unemployed professional business people candidatesSkills and experience

    Another crucial element is the type of skills and experience you want your new employee to have. What are you missing from your business? Are you looking for someone with knowledge similar to your own or do you need someone with a complementary set of skills who can do some of the tasks you want to hand over?

    If you create a list of your potential employee’s ideal criteria, this can help you determine exactly what you need and gives you a head start when it comes time to write the job description. Outline the duties you want them to perform and the necessary skills they will need to complete them.

    This information will also help you assess whether you need a full time, part-time or casual employee. There’s no point taking on a full-timer when you only have 20 hours of work for them to do. It’s important to note that the type of employment will also have implications for your employee’s entitlements.

    Diverse colleagues working on online project togetherCompliance and responsibilities

    As an employer, you will have a significant amount of responsibility and you will need to make sure you abide by Australian laws. The Government’s Business website has extensive information that will support and guide you through the process, but some of the key aspects you need to be aware of include:

    • Adhering to minimum pay rates, terms and conditions
    • Providing minimum entitlements in line with the National Employment Standards
    • Knowing your tax and superannuation obligations
    • Making sure your potential employee has the correct working rights
    • Checking that their licence or qualifications meet your industry standards.

    While the ideal outcome is that your new employee becomes an integral part of your business, it’s also worthwhile knowing the rules around ending employment, as there are specific guidelines you must follow relating to dismissal, notice and final pay.

    Accounting processes

    Another area of your business that will be impacted by hiring an employee is your accounting. You will need to run regular payroll and, as previously mentioned, process super contributions and PAYG withholding.

    If you currently utilise cloud-based accounting software such as Xero, you will be able to complete many of these processes quickly and easily, but it’s worthwhile discussing this with a professional accountant to make sure you set up your system correctly from the outset.

    Man sitting at his desk with laptop in modern officeTalk to your accountant

    There are many different considerations you need to take into account before employing people in your business.

    Here at North Advisory, we are committed to your success. We can provide you insight into the financial aspects of employing staff and can help you determine whether you have the cash flow and budget projections to meet the costs involved. If you’d like to discuss your situation with one of our team, please feel free to contact us today.

    Read more Business Accounting articles.

    Read More Blogs