How much will a new employee cost?
Adding a new team member is a big call but it can also be an inspired move. It can free you up to build the business rather than work in it.
We all routinely underestimate the cost of adding additional employees. Fortunately a new employee calculator is now available free of charge and we think it’s great.
It estimates the total cost of employing someone including their salary, Kiwisaver, ACC levies, Fringe Benefit Tax and insurance. You can also add in discretionary expenses like recruitment, training, carparking, overheads and other benefits.
The calculator also breaks down the total estimated costs into a monthly cost so that you can easily add the figure to your annual budget and cash flow forecast. You’ll be able to see what you’ll need to pay immediately and those costs that may come down the track. The tool also gives you an annual cost.
From there you can export the data into a CSV file or PDF. You can even email the information to a colleague.
We think it’s a really useful tool so that you don’t underestimate the impact that additional costs associated with the new employee will have on your business. It helps you test your assumptions and provides a basis for estimating the amount of additional revenue required to pay for that employee.
Sometimes clients say that employing a new person is more trouble than it’s worth. That assumption is often wrong. You could be missing out on additional profits and a little more time with the family. Hiring the right person is critical to getting the benefits.
You can access the free calculator on the government’s Business site here.