Operating as a sole trader may be a viable option for the first year, but once sales pick up and your business expands, you may want to consider calling in additional help.
When it comes to hiring employees for the first time, however, you should take a few things into consideration or risk spending money unnecessarily.
What do I need to know when hiring employees as a sole trader business?
Here are five tips you should know about before starting the hiring process.
1. A positive attitude goes a long way
Skills and knowledge can be taught, but attitude is hard to inculcate. According to Microsoft, if an applicant is smart, eager and open-minded, skills and training will come easily. However, if you end up hiring a negative, passive and lazy employee, all the skills in the world won't make a difference.
Try to gauge applicants during the interview process by posing a few real-life scenario questions to them and see how they react, and make the effort to call their referees. By doing so you'll increase your chances of taking on an optimistic individual with a can-do attitude, in turn generating significant benefits for your business.
2. Evaluate your cash flow
It's also imperative to consider if you can actually afford to hire a full-time employee by analysing your cash flow. If you find you have high operational costs and relatively low income, it may be more prudent to hire temp staff, students or interns (see below point) as a starting point.
In particular, if you're offering products on credit, this means you aren't getting the cash owed to you at the point of purchase but will likely have to wait the standard 30 days to get paid. This should be taken into account when you're calculating how many employees you can afford to sustain.
Additionally, D&B recommends that every business should have a cash flow forecasting tool to tell you how much money is owed to you, how much you owe others and when these amounts are due.
3. Consider students or interns for admin jobs
Paying someone a full-time salary can be expensive, so consider hiring students or interns at significantly lower wages or at no cost, depending on the nature of the role. You'll benefit from their desire to learn, fresh ideas and dedication, but at the same time you're helping them get ahead in their career.
For this to be effective, HR expert Suzanne Lucas tells inc.com businesses should be prepared to start from the beginning and set clear guidelines/job description outlines, as chances are, your new intern won't instinctively know how a business operates.
Ms Lucas also recommends providing a stimulating, interesting working environment that encompasses both "tedious and boring tasks" such as filing, as well as more valuable learning opportunities such as creative projects or brainstorming sessions.
Alternatively, sites such as fiverr.com, clickchores.com and 2bob.com.au allow you to outsource micro-jobs for a small fee, usually not more than $10 per task.
4. Comply with the law
Small businesses must comply with the Fair Work Act, which provides guidelines on minimum employment conditions, record-keeping, unfair dismissal laws, employee protection and so on.
A best practice guide can be found at the Fair Work website. If you hire from overseas - such as skilled migrants, international students or those on a working holiday - you must be aware of your obligations. For more information, visit the Department of Immigration and Citizenship's website.
5. Know your employee tax obligations
Some of your tax obligations when hiring a new employee include superannuation payments, pay as you go withholding obligations and fringe benefits tax.
Different rules apply for different types of workers and it's important to be aware of the distinction between employees and contractors; as well as between Australian residents working for your business overseas and overseas residents working locally for you.
Visit the ATO's website for more information.
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