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There are many costs associated with employing people in your business. It is important for you to take all of these costs into account during the employment process.

Firstly, you need to consider the time and costs associated with advertising, selecting and interviewing applicants. Depending on the size of your business, type of job and number of applicants, this process can become very involved.

There may also be the need to improve the infrastructure of your business premises in order to employ new people. This includes catering for the physical space another employee will need and the equipment that they will use to complete their work. Part of employing new people will also involve training and developing so that the person can work effectively within the business and with existing employees.

There is the obvious cost of paying a base salary to your new staff member, but there are also the hidden costs relating to employee entitlements. These include superannuation payments, annual leave, sick leave and public holidays. These costs add up to a significant percentage over the base salary.

For example: An employee's wage is $24 per hour.

Therefore:

• Weekly wage = $840.00 ($24 x 7 hours x 5 days)

• Superannuation Contribution = $75.60 ($840 x 9%)

• Annual Leave (4 weeks) = $3,360.00 ($840 x 4 weeks)

• Sick Leave (10 days) = $1,680.00 ($24 x 7 hours x 10 days)

• Public Holidays = $60 per hour ($24 x 2.5 public holiday loading)

On top of these costs, you may be obliged to pay for insurance to cover Workers Compensation. Insurance expenses can vary greatly depending on the level of risk in your particular industry. Employing new people also comes with a number of taxation requirements. These requirements vary from state to state so you should visit the ATO page on Employer Essentials.

After careful consideration of these expenses, you can decide whether or not it is a good idea to employee new people. You may find that the additional benefits outweigh the additional costs, or that you are better off leaving things the way they are.