Taking On Your First Employee: Financial Responsibilities to Plan For

Your business has reached the point where doing everything yourself, or relying on external providers, is limiting what you can take on.

Employing someone may be the next step. Before making an offer, consider the full financial commitment and the responsibilities that come with becoming an employer.

Being able to afford the advertised wage is only part of that assessment. The role, working arrangement, payment obligations and time needed for the employee to contribute all matter.

Establish the role and employment terms

Start with the work to be performed, expected hours, working pattern and intended start date.

Before settling remuneration, confirm the applicable award or registered agreement, classification, minimum pay and entitlements. The National Employment Standards also need consideration. These questions should be resolved against the proposed role, not assumptions based on a similar business.

Full time, part time and casual arrangements have different implications. Casual employment does not remove every leave entitlement or other employer obligation.

Use Fair Work guidance and obtain appropriate employment advice where needed. The accountant’s financial assessment should use properly confirmed employment terms rather than attempt to replace that assessment.

Calling someone a contractor does not settle their status. A contract label or ABN is not enough. Employment, superannuation and workers’ compensation questions may require separate consideration of the actual arrangement.

Budget for more than wages

The financial commitment can include:

• Superannuation.
• Applicable leave, allowances, loadings and other entitlements.
• Workers’ compensation insurance.
• Payroll administration and recordkeeping.
• Equipment, software, training and supervision.

These costs do not all arise in the same way.

Wages and super create regular cash requirements. Equipment and initial training may require spending before the role contributes fully. Your own supervision time may also reduce the time available for customer work.

Paid leave can mean wages continue while the employee is away, with additional cover sometimes needed. Accumulated annual leave can also represent a future financial obligation.

A leave provision records an obligation in the accounts. It does not mean the business has put aside the cash to meet it.

Ask your accountant to distinguish current payments, accrued obligations and expected additional costs. Adding a standard percentage to the wage is not a substitute for understanding the proposed arrangement.

Consider quieter periods and the initial learning period

Assess whether the business can support regular employment costs when customer payments are delayed or trading is quieter.

The employee may need training before working independently. Additional capacity may take time to produce additional revenue, and a larger order book may bring extra material or delivery costs as well.

Use current business records to establish the starting position. Then consider the timing of receipts, existing commitments and the expected cost of the role.

Make the assumptions clear. Distinguish confirmed work from hoped for sales and consider what happens if the employee’s contribution takes longer than expected.

The question is whether the business can sustain the commitment, not simply whether its most recent month was profitable.

Understand payroll and super responsibilities

Payroll involves more than transferring the employee’s net pay.

The matters to discuss include:

• PAYG withholding: Withholding applicable tax from payments and paying it to the ATO.
• Single Touch Payroll: Reporting pay, tax withholding and super information to the ATO through the applicable reporting arrangements.
• Superannuation: Identifying eligible employees, relevant earnings and the contribution and payment requirements.
• Payslips and employment records: Providing employees with pay information and maintaining accurate records of matters such as hours, wages and leave.

Since 1 July 2026, Payday Super rules have linked super contributions to paydays rather than the previous quarterly payment framework.

Budget for super alongside wages and confirm the timeframe for contributions to reach the employee’s fund, including any rules applying to a new employee. Payroll reporting and making the actual payment are separate responsibilities.

Ask the payroll provider to confirm that the arrangements reflect current requirements. Do not rely on an older payroll checklist.

Allocate the work without losing oversight

Agree who will collect and approve hours, communicate changes, process payroll, maintain records and ensure payments are funded.

Also establish who will investigate a rejected payment, correct an error or respond when the employee queries their pay.

Outsourcing processing does not remove the employer’s responsibilities. The provider needs accurate information, while the business needs to understand what has been processed and what remains to be paid.

Software can support the work, but neither software nor outsourcing guarantees compliance.

Address insurance separately from tax administration

Queensland employers must insure workers covered by the state workers’ compensation scheme against work related injury or illness.

Discuss the employing entity, proposed duties and appropriate cover with WorkCover Queensland or the relevant insurer. Do not assume existing business insurance includes this cover.

Workers’ compensation and workplace safety are not simply ATO matters. Appropriate insurance and safety advice may be needed alongside the accounting and employment advice.

What to bring to an initial discussion

Bring the proposed role, expected hours and remuneration, intended start date, employing entity and any draft employment terms.

Include current financial reports, cash flow expectations and known equipment or training costs.

Your accountant can assist with budgeting, financial records and agreed payroll support. Employment law, award interpretation and workplace safety should be addressed through the appropriate sources or specialists.

Speak with Jaha before making the employment commitment to discuss the financial questions and what accounting or payroll work may be needed. Agree on that scope rather than assuming every employer responsibility is included.