The Hidden Costs of Employing Bookkeeping Staff
Bookkeeping Fairy Perth
Superannuation, Computer Support, Outsourcing
Business owners don’t always factor in hidden costs of employing a bookkeeping employee when they hire staff. This case study that I have provided here will ensure that you have taken all of these areas noted into consideration to reflect the true cost of hiring a full time bookkeeper in your business.
1. Base Salary. This is normally quoted as the base excluding any on costs such as superannuation. For this example we will use a base of $65,000.
2. Superannuation. The employer must pay 9.5 % superannuation for all employees earning more than $450 in a calendar month. On a base of $65,000 this would equate to $6,175.00.
3. Annual Leave is normally 4 weeks per year. Remember that you are therefore paying the base of $65,000 for only 48 weeks work per year. To get the proper annualised cost of employment you need to include the annual leave cost at 7.69% (4/52). In our example this is $4,998.50.
4. Public Holidays. There are usually 10 public holidays in Australia each year. This is another 3.85% (2/52) to add to the total cost. This is $2,302.50 for our case study.
5. Personal Leave. Most awards allow for 10 days personal leave per annum so add another 3.85% at $2,302.50.
6. Workers Compensation Insurance. This can vary broadly depending on the risk of the industry. The rate is fixed each year by statute and cannot be negotiated. For our example, let's use 5%, so that's another $3,250 to our employment costs.
7. Payroll Tax. This is a State Government tax that is levied once your annual payroll (including super) exceeds a certain threshold. The rate and threshold varies slightly for each state but we will use WA for our example. The threshold is $750,000 and the rate is 5.5%. Remember, you may not exceed this threshold now but if you're planning on expansion, this should be built into your rates for when you exceed it in the future. In our example this amounts to $3,575.00.
So the cost of employing someone on a base salary of $65,000 pa is actually $87,603.50!!
Based on a 37.5 hour week that is $48.67 an hour your bookkeeper can cost you over a year!!
This example demonstrates why it is worth looking to outsourcing to a specialist provider for your bookkeeping needs. The recent changes with the Tax Practitioners Board has really given the industry a shakeup requiring bookkeepers to get qualified and become registered. A certified bookkeeper must have a Certificate IV in Financial Services (bookkeeping), and additionally a BAS agent has be registered member of a professional organisation and is of good character, undertake ongoing continuing professional education and have Personal Indemnity Insurance.
If you have any queries call Jaleana from Bookkeeping Fairy Perth on 0400 102 358 or visit my website www.bookkeepingfairyperth.com.au
6. Workers Compensation Insurance
, Computer Support
, Employ Bookkeeper
, Payroll Tax.