Find out how we can help your business this end of financial year Learn More

Hiring Employees – Preparing & Finding

One of the most exciting milestones with running your own business is realising the business has grown enough to justify hiring employees. Great work! This is one of the first stepping stones in developing the business further.

But how do you know if your business is at the point of hiring staff? Some indications could include:

  • You’re run off your feet trying to wear too many hats in the business such as the quoting, bookkeeping or other compliance tasks.
  • You’re turning work down.
  • You’ve identified another revenue stream you could tap into but don’t have the resources to do so.
  • There is enough available cash in the business to support an employee’s wage and employment on-costs.

If you can resonate with the above points, then it’s possibly time to consider hiring an employee or two to keep your business running smoothly and help carry the load!

How to prepare for your first hire

There are a few practical components you need to be aware of and organise prior to hiring your first employees to avoid unnecessary delays, costs and complications. Aside from knowing your legal obligations as an employer, here are the main areas you realistically need to have set up:

  1. Employment contracts

An employment contract is an agreement between an employer and employee, setting out the terms and conditions of employment. We recommend engaging a lawyer or HR consultant to assist with drafting the contract.

The basic components that will be included in the contract include the type of employment, remuneration and obligations of the employee in the role.

Keep in mind, the employment contract is not permitted to provide for less than the legal minimum entitlements set out in the National Employment Standards or entitlements under a relevant award, enterprise agreement or other registered agreements.

  1. Setting up Single Touch Payroll (STP) enabled software

Most accounting software will have a payroll component or add-on, so it will be time to upgrade your subscription to include payroll. We can assist with setting up the employee in the system and providing demonstrations on how to process a pay-run.

Pay-runs will need to be processed as frequently as the pay period laid out in the employment contract. The pay-run will calculate the employee’s gross wage, PAYG withholding, superannuation guarantee entitlement, the net wage you need to pay the employee and also leave accrual entitlements.

Once the pay-run has been prepared, it will need to be submitted to the ATO in real-time. This is a relatively new requirement of the ATO under their Single Touch Payroll regime.

  1. Register for Pay-As-You-Go Withholding (PAYGW)

PAYG Withholding refers to the process of withholding a portion of a wage payment as tax. It is mandatory to have each employee complete a Tax File Number (TFN) declaration form upon commencement of employment. This will determine your withholding obligation for each employee, which gets set up in the payroll software.

As mentioned above, the pay-run will automatically calculate the amount of PAYG Withholding you are required to withhold from the employees wage every pay-run based on the employees TFN declaration and the relevant marginal tax rates.

You will then be required to report and pay the withholding to the ATO in monthly or quarterly activity statements. This is a straightforward lodgment process which can be done via the Business Portal. If you haven’t already set-up the business portal, you can refer to Michael Lamont’s blog on how to do this or get in touch with us.

  1. Superannuation guarantee obligations

Superannuation guarantee refers to the compulsory superannuation contributions that employers are obligated to pay on behalf of employees.

For the 2024 Financial Year, the superannuation guarantee rate is 11%. This will increase to 11.5% in the 2025 Financial Year and 12% the year after, where it plans to remain stationary. This means employers are required to pay 11% of an employee’s ordinary times earnings (salary and wages, most allowances, bonuses, leave payments but not overtime payments).

Employers should pay the superannuation component through your payroll software. This is a requirement of the ATO’s SuperStream regime which was introduced in 2016. It allows for Superannuation payments and data to be sent electronically in a standard format.

Superannuation payments are due to be paid 28 days after the quarter-end (e.g., for the September quarter, superannuation would be due on the 28th of October).

  1. Workers compensation

Another final consideration of hiring your first employee is obtaining a workers compensation policy.

Workers compensation is a State-based requirement, providing support for workers with a work-related injury. It is a legal requirement to have a policy if you pay wages of $7,500 or more during a financial year.

In NSW, most employers can only take out workers compensation insurance through iCare. The premium payable to iCare to obtain the policy is dependent on a handful of factors such as the amount of wage payments made during a 12-month period and the industry you operate in. The more risk employees are exposed to in particular industries, the higher the premium.

Finding the talent

Now what? You’re all set up and ready to go, now it’s time to find the talent!

Finding the right staff to hire isn’t an easy task. One of the major steps in this process is writing a good job advertisement, one that interests applicants. To make sure the job ad hits the mark with candidates, other considerations you need to make during this process include:

  • What gap do you need to fill in the business? Will the position be administration and industry-related, does the candidate need to be qualified or have experience? Write a list of what the position will involve, the daily duties and responsibilities and any technical qualifications or soft skills required.
  • What information is it important to include about your business? Now is a great time to reflect on your business’ vision and values. What does the business stand for and what type of culture do you want to promote? This is critical in ensuring the candidate will be the right fit.
  • Consider why someone would want to work for you over another employer. Getting good staff can sometimes be really hard, so is there a way to make your business a more attractive employer, such as offering hybrid working models, regular training or performance bonuses? All of these incentives could be included in the job ad.

Once you’ve formalized the job ad, it’s time to go public! There are a few popular online employment marketplaces available such as Seek and LinkedIn. Hopefully you find that once the ad is live, you get a number of applicants submitting their resumes and after a few interviews, you find a successful applicant to join the team and help grow the business!

If you are thinking now is the right time to hire an employee, please reach out to us first! We will ensure you have everything set up and ready to go. While we are not employment lawyers, we can advise you on tax and super-related payroll queries, and put you in touch with the right people for employment contracts.

BLG Business Advisers are Wollongong Accountants who service all over Australia and our team are always ready to help you out. As always, don’t hesitate to reach out for a chat so that we can assist you in this important area of your business!

Blog-CTA_Business Advice

*Please note that the above information is general advice only. We recommend you seek advice from a specialist relevant to your personal situation. This information is correct at the time of publishing and is subject to change*
Filter Categories

Are you ready to speak to a business adviser?

Let us show you how we can help.

If you’re more of a talker we’d love to chat, call us on 02 4229 2211

Talk with us

Schedule your chat

Do you have business challenges you need answers to?
Our team can help you. Fill out the form, find out if we are the right fit for you, then you can start receiving results!

close (3)

Related Reads

ATO Cracks Down on Superannuation Guarantee

Superannuation Basics – What and how much?

Employers in Australia generally have an...

mail (1)

Get business advice that helps you, no matter what stage of business you’re in.

Yes, an email that matters!