As a small business owner, getting the support you need can be hard work. Understanding what tasks can be outsourced, the time required to interview and bring on new staff, not to mention the time needed to train and hand over processes.
All whilst you are trying to get the actual work done! Once you find the time to map out what support you need and what tasks can be outsourced, understanding the finances around expanding your team is an entirely new labyrinth to navigate, especially for those transitioning from a Sole Trader to engaging your first team member.
Know Your Finances
You may have the workload to bring someone on board, but do you have the budget? Having an accounting program set up and used correctly can help you understand your actual financial position.
We can help set you up with a suitable system to track your finances.
Streamline and Stay On Track
Accounting Software can save you headaches by streamlining tasks such as tracking Super and Payroll tax obligations automatically.
They often can be integrated with online timesheet options or, better yet, have the functionality built-in to streamline tracking your staff time.
For those who work on client projects, you can even set them up to review the cash flow on each project, so you have real-time clarity around:
- How much are you paying staff and suppliers vs how much are your clients paying you for a project
- If you are keeping to your budget
- Which types of jobs consistently go over?
The software can help you understand what is working and what is not, all in real-time, which gives you certainty about where you can afford to bring on help and where it might not be feasible.
Contractor vs Employee: Payment, taxation and benefits
There are key differences between contractors and employees, which is important to understand so you can hire the correct type of support for your business. The ATO has a decision tool to help you understand which is the right fit for your business.
What is an employee?
An employee is generally someone you engage to work within your business. All employees in Australia are covered by Fair Work, and as an Employer, you are responsible for understanding your legal obligations when offering someone employment. When you hire an Employee, you may be required to withhold PAYG and pay Super and Payroll Tax. You will most likely need WorkCover as well.
What is an independent contractor?
Contractors you engage directly will generally have a specified task or project to complete. This gives parameters around the timeframe and cost before starting.
They are typically project-based or task-based work.
In some cases, you may need to pay independent contractors Super; however, as they are not employees, you typically would not be required to pay PAYG or Payroll Tax.
If you hire contractors via an outsourcing company, their role may be like an in-house employee, but you pay the organisation and not the staff directly.
Extra Fees When You Grow
You may also incur other fees when you bring on new staff or independent contractors, it could be as simple as hosting a new email address, or a new staff member could require a significant investment in vehicles and tools.
Don’t Get Caught In a Bidding Frenzy
When the market becomes competitive for acquiring new staff, having a strategy behind what assistance you need and what you can afford can make all the difference. If not, then you might find your business model isn’t viable.
Understanding what you can outsource and your financial position can help you to evaluate the feasibility of your options to acquire staff.
Offer More Than Just A Pay Check
Many small businesses that can’t compete with the salaries of bigger organisations may have a competitive edge in offering flexibility and other non-monetary incentives to staff. These could range from RDOs, work-from-home options, and upskilling programs. These types of incentives for employees may help to capture your quality long-term staff.
If you are thinking it is time to grow your business, book a chat with our team. We can review your finances and help you walk through your cash flow so you can understand the feasibility of growing your team.
This blog post is intended for informational and educational purposes only. The information provided in this blog post should not be taken as professional accounting advice or recommendations.
Liability limited by a scheme approved under Professional Standards Legislation.