Hiring

What does that hire actually cost?

The salary is the number you agree on. It isn't the number that leaves your account. Employer payroll tax sits on top of every dollar of wages. The benefits you offer are a real cost every month, whether or not anyone uses them that month.

Start a full model to put the hire in, or work out what it really costs below first.

Put the three together and you get the figure to plan against. Then look at what it does to the calendar year you're already in. A July start costs half of what a January start does inside that year, and the full amount every year after.

Fill in what you're offering and the rest is arithmetic.

The hire

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Salary a year

Employer payroll tax, % of wages

Benefits allowance a year

Start month

True cost a month

Salary, plus payroll tax on the salary, plus a twelfth of the benefits allowance.

Cost in the first calendar year

Twelve months of pay, January to December.

Cost across three years

Thirty six months at the same salary. A raise, a bonus or a change in benefits is on top of this.

When it hits your cash

Payroll is the one cost you pay in the month it's earned. A supplier invoice can sit for thirty days before you pay it, so it lands on next month's cash and gives you a little room. Wages don't wait.

That's why a hire moves your low month more than a cost of the same size that you can pay later. The month they start is the month the money goes.

Put this hire in a full model

What the full model adds

The hire sits on a roster with a start month, an end month and a share of full time. Everyone else you plan to hire sits beside them.
Payroll tax and the benefits allowance are set once and apply to every role, so the whole team is costed the same way.
Wages land on the income statement in the month they're earned and leave your cash in the same month. So the low month on your cash flow page is the real one.
An optional profit share pool is sized on the year's income, capped against base salaries, and paid the following March.

Building the model is free. Saving it to your account, the Excel workbook and the print pack are on a paid plan. The pricing page lists what comes with each one.