Hiring your first employee: what it really costs, and what to do

The first hire is a milestone every owner remembers. It’s also the point where the business stops being “me with some help” and becomes an employer — with a payroll to fund every week, whether customers pay on time or not. Getting the money side right from the start makes the difference between a hire that frees you up and one that keeps you awake.

What does an employee really cost?

The wage is only the start. Here’s an illustrative build-up for a full-time employee on a $65,000 base salary. Your figures will differ by award, state and role.

Cost	Illustrative annual amount	Notes
Base wage	$65,000	Check the relevant award minimums with Fair Work
Super (12%)	$7,800	Paid with each pay run under Payday Super
Workers compensation	$1,000–$2,500	Varies by state scheme and industry
Leave loading and allowances	$0–$1,500	Depends on the award
Equipment, uniform, tools	$1,500–$5,000	Often up front
Software, phone, vehicle share	$1,000–$6,000	Depends on role
Recruitment and training	$1,000–$4,000	Advertising, your time, induction
Indicative total	about $78,000–$92,000	Before payroll tax, if applicable

Then there’s the ramp-up. Most new employees take weeks or months to become fully productive, and your own time goes into training them. During that stretch, the hire is a cost before it’s a contributor.

How much extra revenue does the hire need to generate?

Use your gross margin. If the total cost is $85,000 and your gross margin is 40%, the hire needs to generate about $212,500 in extra sales — or free up enough of your time to win or deliver that much — just to break even. Our break-even guide shows the method.

That number is often a surprise. It doesn’t mean don’t hire; it means be clear about what the role must achieve and by when.

What’s the employer checklist before day one?

Based on business.gov.au’s hiring guidance:

1. Decide the role and employment type — casual, part-time or full-time.
2. Check the award and pay rate. Fair Work’s pay tools help identify the right award and minimums.
3. Register for PAYG withholding with the ATO.
4. Arrange workers compensation insurance through your state or territory scheme.
5. Prepare an employment contract setting out hours, pay and duties.
6. Give the Fair Work Information Statement (and the casual or fixed-term statements where they apply).
7. Collect a TFN declaration and super choice form.
8. Set up payroll that reports through Single Touch Payroll.
9. Plan an induction, including health and safety.
10. Set up records — business.gov.au says employment records must be kept for 7 years.

How has Payday Super changed things?

From 1 July 2026, super for each pay run has to arrive in the employee’s fund within 7 business days, according to the ATO — or within 20 business days for a new starter in some cases. The super guarantee rate is 12%.

For a first-time employer, that’s simpler to budget: super leaves with every pay run, like wages. Build it into your weekly or fortnightly cash plan, and make sure your payroll software handles it. The Fair Work Ombudsman has published a plain-English overview of the change.

Need a little working capital to carry the first few months while your new hire ramps up? See what funding might suit — enquiring doesn’t touch your credit file.

Employee or contractor for your first hire?

If the work is short-term, specialised or project-based, a contractor may make more sense. If you need someone working in your business, under your direction, week in week out, they’re likely an employee. Our comparison of contractor vs employee costs explains the money and the risks of getting it wrong.

How do you fund the gap until the hire pays off?

Plan the ramp-up in your 13-week cash flow forecast: add the new wages and super from the start date, and add the extra revenue only from the week you realistically expect it. The gap between those lines is the cash the hire needs.

Options to cover it:

• time the hire for your busier season, when cash is stronger;
• lift prices first so margin helps pay for the role — see raising your prices;
• arrange a line of credit or working-capital facility sized to the ramp-up period.

Casual, part-time or full-time: how does the choice change the cash?

Each employment type has a different cash shape:

• Casual — you pay only for hours worked, with a casual loading under most awards instead of paid leave. Cash cost moves with your roster, which suits variable demand.
• Part-time — agreed regular hours with pro-rata leave. Predictable, and a good fit when the work is steady but not a full week.
• Full-time — the highest fixed commitment, but also the most capacity and continuity.

Many first-time employers start with casual or part-time hours and increase as the work proves itself. Whatever you choose, check the relevant award for minimum engagement periods, rates and loadings, and build the cost into your prices — our guide to pricing your services shows how staff costs feed into your hourly rate.

Grow the team without starving the business

A good first hire is one of the best investments a business can make — it frees you to sell, plan and lead. The cash flow squeeze in the first months is normal and plannable.

We consider trading businesses for working-capital and line-of-credit facilities typically from $5,000 to $500,000, and property-secured loans from $20,000 to $5,000,000. There’s no credit check when you enquire, your details aren’t handed around a group of lenders, and a real person calls to understand your plans. Please tell us accurately what the hire costs, your turnover and the timing — it helps us match you properly at the first conversation.

Check what your business qualifies for →