Thinking of hiring? Here’s the calculator for you
On: 26 November 2014
The new Employee Cost Calculator is just the ticket for small business owners who want to employ someone, but are unsure of the costs.
The calculator was designed to help small to medium businesses make confident hiring decisions, and is part of a package of tools being developed by Business.govt.nz, the government’s website for small businesses.
Now you can quickly estimate the fixed and discretionary costs when you take someone on.
How it works
Using data from government agencies and Trade Me Jobs, the calculator tailors employment costs to your industry and the type of role you think your business might need.
You can find out what you’re going to be paying straight away, and get a breakdown of the compulsory costs like ACC levies, KiwiSaver contributions and Fringe Benefit Tax. The tool also shows you the cost of employing someone in the first year, and a monthly ballpark for your budget. Try out different scenarios for your business and email your results or save them as a PDF or .csv file.
Weighing up the pros and cons of employing someone
The calculator helped one small business owner to question her assumptions about taking on staff – and opened up a world of possibilities for her business.
Like many small business owners, Mel had thought hiring staff was more trouble than it was worth. She runs a communications consultancy and used contractors in busy times, preferring to pay top dollar than to have the responsibility and ongoing costs of being an employer.
But Mel got to a point where working with contractors didn’t give her business the continuity it needed. She wanted to grow the business and the only thing stopping her was a mental block about hiring permanent staff.
Mel ran her numbers through the tool and found that if she employed an experienced communications specialist part-time it would cost $46,000 in the first year. The tool helped her see that the KiwiSaver costs were less than she thought, and to be realistic about how much it would cost up front to find the right person.
Working out the potential profit was quick too, and exciting. Mel estimated that her employee could take on 18 hours of client work a week, bringing in $68,000 a year at standard consulting rates for her industry. After salary, compulsory and set-up costs, Mel’s business would be $21,000 better off in the first year – and, Mel’s time would be freed up to grow the business.