Picture this, you are running a small owner-operator business, and business is booming. You want to take the next step toward scaling your enterprise, but you are at capacity.

You can see opportunities for growth everywhere. You have a solid business plan and are gaining traction and a reputation in your field but lack the resources to fully commit to tackling those larger scale jobs. You have thought about bringing on your first employee, but have now idea where to start…

Sound Familiar?

Crossing this threshold can be a daunting hurdle for business owners. Employing staff for the first time can be a source of great stress for the business. While the right person can free up valuable time and enable you to focus on generating new work, becoming an employer comes with an additional level of complexity for the business. Your role changes and, and there are many hurdles to overcome.

Additional Obligations For Employers

Many business owners do not realise that bringing on employees can result in a high level of additional overhead and administrative obligation for the business. Here are some examples:

• As an employer, your first of many considerations will be to ensure you have adequate cashflow to pay regular wages. You will need an accounting system capable of recording those wages and reporting the Australian Taxation Office (ATO) through Single Touch Payroll (we love Xero).
• Employers are responsible for withholding “pay as you go withholding” (PAYGW) tax on behalf of their employees and must pay this tax to the Australian Taxation Office (ATO) quarterly in their Business Activity Statement (BAS).
• Employers are also required to pay quarterly superannuation contributions to their employee’s chosen superannuation fund by the 21st day of the month following the end of the financial quarter.
• A valid workers’ compensation insurance policy is also required, and actual wages must be declared annually to the governing body (iCare).

In addition to the increase in administrative obligations, your job pricing, quoting and charge out rate will need to be reviewed and likely amended to account for the additional business overhead. This additional labour resource may enable the business to take on larger, more profitable jobs, however these contracts often come paired with increased direct upfront costs and longer payment terms. This can put a serious strain on the cashflow of an underprepared business. Having a cashflow plan and accurate breakdown of your budgeted job costs becomes essential.

How We Can Help Your Business

It is easy to see why the above scenario can overwhelm business owners. This can be an enormous change all at once, and it is so important to get it right.

Our team has extensive experience guiding business owners on their journey from startups through to mature businesses. So if this sounds like you, we would love to hear from you. Get in touch with our team below or 02 4969 6600.