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  • #982823
    elemist
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    Howdy All,

    Long time lurker, first time poster :)

    I hope this is the right section for this to post in, if not please feel free to point me in the right direction (aka move the thread!) :)

    For the past 3-4 years i’ve been running an IT consultancy and support business in WA. Mainly providing small and a couple of larger businesses with day to day IT support as well as providing hardware/software.

    Finally the business has built up to the point where a few things are happening and i’m contemplating employing someone.

    Now as most of you are aware this can be quite daunting. I’m constantly crunching the costs and the figures to work out if i can afford to hire some one.

    My issues are two fold – fluctuating business, for majority of last year i was crazy busy, however so far this year it has been pretty quiet in comparison. Secondly i’m concerned about taking on additional expense and whether it will actually bring me more business or whether it will just eat up any profit i’m making.

    I have a couple of purposes for employing someone. Firstly the biggest complaint i hear from my customers is they can’t get hold of me. This is primarily due to me being a stickler that i don’t answer my phone generally when i’m onsite with someone. So having someone to take calls and deal with minor things immediately will improve the good will with my customers. Secondly i would like to delegate some of the more trivial things so i’m not crawling under desks plugging things in, which in turn will hopefully free up more of my time to dedicate to quoting and proactively offering services.

    I was initially was leaning towards trying to sub contract a 1 person small company to assist, however i’ve been advised by my accountant/book keeper with regards to still being liable for super, holiday pay, sick pay etc etc depending on the situation, it appears even after reading the information on the ATO website that it’s a bit of a grey area and open to interpretation which concerns me.

    So given that, and the obvious concerns about poaching of clients – not hearing about potential new business etc i’m leaning more towards employing someone directly.

    Whilst i don’t currently have the workload for a full time employee, i’m concerned about having either a part time or a casual person for a few reasons. In the case of a part timer / casual i run the risk of not having work on the days they are working and being very busy on the days they’re not. However on the flip side i’m concerned about employing someone and then not gaining enough work to justify their wage – aka running out of money to pay not only them but myself as well.

    So the main reason for my post is to ask a couple of pointed questions and if anyone wants to offer some general advice please feel free!

    1) What is required to employ someone? From what i have read and common sense – an employment contract (i’ve found templates available on a few legal form sites – australian based of coarse, is this all i need?). I believe i also need to have workers compensation insurance? Where do i get this from? And any ideas on how much something like this would cost? What else?

    2) Is it possible to employ someone on a short term contract IE say 3 months? What’s the pros / cons of employing on a short term contract? Can you employ someone as casual on a short term contract so i’m not liable for holiday/sick pay/super and it has a fixed end date? Can you also add in the option of re-negotiating to extend the contract with mutual agreement? I know typical employment contracts i’ve had in the past usual have a 3 month probation period – could something like this be used to end the contract after 3 months if i don’t have the work to justify keeping someone on or is that more for performance issues?

    3) There will be a reasonable amount of onsite work as in travelling from the office to a clients offices. What am i legally required to pay for in regards to this? things like vehicle maintenance / fuel costs? What are the common methods that this is done? I was in a previous position given a fuel card, however i know how easily these can be abused. Would something like a log books recording travel and then paying a per k charge be effective?

    4) What if it doesn’t work out? If i don’t gain any additional work or can no longer afford to have someone on staff what are my rights in getting rid of them? Is i can’t afford to pay you an acceptable reason to terminate someone? Would i then be liable for a payout/redundancy of some description?

    5) Finally what are people thoughts and experiences on actually finding people. Is it worth the $250 cost to advertise on Seek? What about things like Gum Tree, Whirlpool etc?

    Thanks in advance for your information and advice!

    Cheers,
    Troy

    #1139042
    Anonymous
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    Hi Troy,

    Welcome to Flying Solo. We love it when a long-time lurker turns into a first time poster, so you’ve made my day! :)

    I’m no expert in employment related matters (there are other folk around here who can advise you on those), but the first question that comes to mind is whether you may be best off engaging a virtual assistant to handle all those phone calls and administrative things.

    Is that something you’ve considered?

    All the best with it all,
    Jayne

    PS: Apologies that your post got stuck in our moderation queue for a while there, but it is here now. :(

    #1139043
    Chris – Marketing
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    • Total posts: 162
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    Hi
    In regards to sub contractors – you are not liable for super, entitilments etc if the the sub contractor is a seperate business and you as a client don’t occupy a large percentage of his business (refer to the ATO website for %).

    I have an IT client and they do at least 90% of their business remotely. Is this possible for your Business? When we were growing this company we soursed specific providers that offered systems with 24hr support, is this possible for you?

    #1139044
    elemist
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    • Total posts: 7
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    FS Concierge, post: 158628 wrote:
    Hi Troy,

    Welcome to Flying Solo. We love it when a long-time lurker turns into a first time poster, so you’ve made my day! :)

    I’m no expert in employment related matters (there are other folk around here who can advise you on those), but the first question that comes to mind is whether you may be best off engaging a virtual assistant to handle all those phone calls and administrative things.

    Is that something you’ve considered?

    All the best with it all,
    Jayne

    PS: Apologies that your post got stuck in our moderation queue for a while there, but it is here now. :(

    Hi Jayne,

    Thanks for the warm welcome, and no problems about the moderation :)

    I had thought about some kind of virtual assistant or even some form of outsourced call centre. In some ways i’ve done this partly already by outsourcing a good chunk of my book keeping and accounting.

    Problem i have is that pretty much all the calls i get are for support, so an untrained person who doesn’t know anything about IT or anything about a customer isn’t going to be able to do anything that my voicemail can’t.

    Chris – Marketing, post: 158631 wrote:
    Hi
    In regards to sub contractors – you are not liable for super, entitilments etc if the the sub contractor is a seperate business and you as a client don’t occupy a large percentage of his business (refer to the ATO website for %).

    I have an IT client and they do at least 90% of their business remotely. Is this possible for your Business? When we were growing this company we soursed specific providers that offered systems with 24hr support, is this possible for you?

    Thanks also for your advice. Last i heard it was over 50% in a financial year. But there’s also some other conditions in regards to you providing them with tools/equipment and instructing them on a day to day basis. One thing i read on the ATO’s site basically stated if the sub-contractor is carrying out multiple jobs under your direction like an employee would do they are classed as an employee, if they are brought onboard to complete specific tasks in relation to a specific project they are a sub-contractor. Given i would be using them across multiple “projects” and i have no way of knowing what % of their workload is from me, it just seams like a sticky area.

    There’s also the potential to lose business to them – not only existing clients but also prospective new clients.

    I have always provided remote support, however in an attempt to manage through the busy periods i’ve invested in some new software and deployed it out to majority of the computers i look after. This has impacted my bottom line a bit unfortunately as previously i would be making an onsite visit with a min 1 hour call out to fix these issues vs only min 15 mins for remote work. However it keeps people happy and makes my life less hectic.

    I’ve thought about outsourcing this, but i had a few concerns. Primarily the loss of the personal service. At the moment when they have a problem they call me and i fix it. Calling a call centre can be a horrendous experience of waiting in a queue and then listening to a script.

    There’s also an issue of trust. For them to be able to complete work they need to have high level administrative access to everything. Given i don’t have any say in who is employed, i consider it high risk – in that a discruntled employee could cause massive issues.

    #1139045
    Chris – Marketing
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    • Total posts: 162
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    Trust is something which is built up over time. Business relationships need to be formed. There is enough business out there for everone. It comes down to your business plan. Do you want to remain a sole operator or do you want to grow? The choice and life style is yours. Not everyone wants to grow and I appreciate that as my business plan lifestyle has changed no kids at home, more time with the grandkids, and longer holidays so I am winding down.

    Can u out source sections or componets of your systems from other providers which will free up some of your time?

    #1139046
    CindyK
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    • Total posts: 155
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    Hi Troy,

    Thats quite a comprehensive set of questions. :)

    I both have employees myself, and we help clients to move from micro to having employees. Make sure that you work on the systems and processes that you want them to work from, by which I mean the work procedures, task lists etc. Be sure to be clear in your own mind what they are accountable for.

    Your accountant has given you good advice. The rules for contractors/ employees are grey but becoming more tricky. There are tools to help, but in many cases technically a contractor should also be paid super, have tax taken from their wage and covered under your workers compensation policy.

    1. Yes, you should have an employment contract. You should also provide a Position Description that outlines their role, who they report to, work locations, times etc. You need Workcover for employees (and in some cases contractors) and each state has one – for example in Queensland its Workcover Qld and the minimum policy is $275/year. The cost is worked out on a formula of employee wages x risk rate (of the industry/job). You need to register for PAYG Withholding with the ATO, which your accountant can do for you. You also need to be familiar with the Fairwork Act and the National Entitlement Standards (NES) that cover all employees in Australia.

    2. Yes you can employ someone on a fixed contract. However, if you require them full time they are entitled to pro-rata holiday/sick pay.
    All employees are entitled to superannuation – both permanent and casual if they earn over $450/month. Casual employment means that you guarantee them no fixed work. They are paid a higher hourly rate than permanent employees to compensate for holiday and sick pay.

    3. An employee is responsible for their first trip in the morning and last trip home. Every other travel component is claimable – either in their tax at the end of the year or reimburseable by their employer. Your employee will need to keep a log book for their own tax – so it could be included in the position. The ATO has a designated rate for cents per kilometre reimbursement for business travel. You can also pay a straight travel allowance. Speak to your accountant about how they prefer you handle it – as each is different.

    4. In Australia we have small business laws that assist in this area. Redundancy is not payable to employees who are employed in an organisation with 15 or less persons. Financial hardship is also a legitimate reason for letting go of an employee where you have a) under 15 employees and b) you can show your position if necessary. This applies to permanent employees though, not casuals.

    Casual employees are ones whom you can ask to work anywhere from 3 hours per week up to 38 hours per week. They are paid a higher hourly rate (as mentioned) to compensate for sick/holiday entitlements. You need to give them at least 24 hours notice if you don’t need them for a shift – but you can ask them to work any normal day hours that you like, with no guarantee of further work. So if you have work all through until July and then it dries up, you can simply let them know you have no further work at the moment. No hassles.

    5. Generally speaking you receive a better quality of applicants on Seek or Careerone but many people use classifieds successfully.

    Hope that covers most, no doubt you will get more info and suggestions tomorrow.

    Good luck!

    #1139047
    Greg_M
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    A very good post (IMOH as an ex employer of staff and subcontractors) from @CindyK, sounds like your accountant is onto it as well.

    Something I have done in the past, that may work, is to approach some of the specialist work/training providers. They are the actual employer, you pay contract rates (often subsidised for trainees), you get a junior that can be trained to your work processes (and maybe go further) at reasonably low cost … if it doesn’t work out, or you don’t have the workload, you just hand them back. They at least get some real work experience and you’ll get a chance to see if it works.

    Most schemes I’ve seen have a trial period to see if the applicant is a dud.

    In the past I’ve run adult apprentices this way, and it worked ok. They handled all the employer stuff … I just trained (and worked the butt off) the apprentice’s and got an invoice monthly.

    One organisation that new me, used to ring and offer kid’s that just needed some real world experience, often at close to zero rates … there was the occasional gem hidden amongst the rubbish (whole other post on work values and parenting :)), and I enjoyed giving someone worthwhile a crack.

    #1139048
    elemist
    Member
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    Cindy thank you so much for taking the time the write such a detailed post!

    Few additional queries below

    CindyK, post: 158647 wrote:
    Hi Troy,

    Thats quite a comprehensive set of questions. :)

    I both have employees myself, and we help clients to move from micro to having employees. Make sure that you work on the systems and processes that you want them to work from, by which I mean the work procedures, task lists etc. Be sure to be clear in your own mind what they are accountable for.

    Thanks – yep definitely agree with this. I’ve already started documenting everything i do :)

    CindyK, post: 158647 wrote:
    Your accountant has given you good advice. The rules for contractors/ employees are grey but becoming more tricky. There are tools to help, but in many cases technically a contractor should also be paid super, have tax taken from their wage and covered under your workers compensation policy.

    1. Yes, you should have an employment contract. You should also provide a Position Description that outlines their role, who they report to, work locations, times etc. You need Workcover for employees (and in some cases contractors) and each state has one – for example in Queensland its Workcover Qld and the minimum policy is $275/year. The cost is worked out on a formula of employee wages x risk rate (of the industry/job). You need to register for PAYG Withholding with the ATO, which your accountant can do for you. You also need to be familiar with the Fairwork Act and the National Entitlement Standards (NES) that cover all employees in Australia.

    I’ve had a hunt through the Work Cover WA site and sent off an email to my current business insurance guy.

    The two specific categories which i think my business would fit into would be

    78330 Computer Maintenance Services 0.26
    78340 Computer Consultancy Services 0.25

    Anyone have any idea about what specifically these cover/entail?

    CindyK, post: 158647 wrote:
    2. Yes you can employ someone on a fixed contract. However, if you require them full time they are entitled to pro-rata holiday/sick pay.
    All employees are entitled to superannuation – both permanent and casual if they earn over $450/month. Casual employment means that you guarantee them no fixed work. They are paid a higher hourly rate than permanent employees to compensate for holiday and sick pay.

    Is there any set rates on how much higher casuals need to be paid over part time/full time. Also where can i find information about minimum wages? I did look through some information a while back on all the award agreements and as far as i could recall there was no specific award for IT workers.

    CindyK, post: 158647 wrote:
    3. An employee is responsible for their first trip in the morning and last trip home. Every other travel component is claimable – either in their tax at the end of the year or reimburseable by their employer. Your employee will need to keep a log book for their own tax – so it could be included in the position. The ATO has a designated rate for cents per kilometre reimbursement for business travel. You can also pay a straight travel allowance. Speak to your accountant about how they prefer you handle it – as each is different.

    So i could if i wanted say you have a flat hourly rate that includes a component for travel? and then they claim the travel back on their own tax?

    I guess this is probably more down to having a rewarding proposition to attract a good employee though. So would probably be better to have some sort of travel allowance additional.

    CindyK, post: 158647 wrote:
    4. In Australia we have small business laws that assist in this area. Redundancy is not payable to employees who are employed in an organisation with 15 or less persons. Financial hardship is also a legitimate reason for letting go of an employee where you have a) under 15 employees and b) you can show your position if necessary. This applies to permanent employees though, not casuals.

    Casual employees are ones whom you can ask to work anywhere from 3 hours per week up to 38 hours per week. They are paid a higher hourly rate (as mentioned) to compensate for sick/holiday entitlements. You need to give them at least 24 hours notice if you don’t need them for a shift – but you can ask them to work any normal day hours that you like, with no guarantee of further work. So if you have work all through until July and then it dries up, you can simply let them know you have no further work at the moment. No hassles.

    Pretty sure i know the answer to this, but there’s no way of forcing a casual to be available during certain hours but not having to use them? IE saying you must be available on a Mon, Wed and Fri. But then if i don’t have any work not calling them?

    CindyK, post: 158647 wrote:
    5. Generally speaking you receive a better quality of applicants on Seek or Careerone but many people use classifieds successfully.

    Hope that covers most, no doubt you will get more info and suggestions tomorrow.

    Good luck!

    Thanks again! :)

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