Published: October 2025
Most Australian business owners see a salary figure and think that's what hiring will cost. A finance manager at $80k. A bookkeeper at $70k. An HR coordinator at $85k.
But here's what almost no one tells you: the actual cost of that employee is 30-50% higher than the base salary you've approved.
For most SMEs, that $80k hire becomes a $115k-$125k annual commitment once you factor in superannuation, payroll tax, leave entitlements, recruitment costs, equipment, and management overhead.
And that's before considering turnover risk, training time, or performance issues.
This article breaks down the real numbers behind hiring in Australia - and why understanding them might change your decision entirely.
Here's what most business owners miss when budgeting for a new employee:
Total Estimated Annual Cost: $113,560 - $121,560
*Payroll tax thresholds vary by state; NSW applies 5.45% once total wages exceed $1.2M annually
That's a 42-52% uplift on your expected salary spend - and we haven't even factored in:
The reality: Your $80k hire is closer to a $120k commitment.
See Our Cost Comparison Calculator
For small and medium businesses, these hidden costs create three major problems:
Once you hire, you're committed. Salary, super, leave entitlements, and notice periods don't flex with your business cycles.
Even when you realise you only need 15 hours of finance work per week (not 40), you can't easily adjust. You've committed to full-time employment.
Most businesses end up either:
When your one finance person is sick, on leave, or quits, you're stuck:
This isn't just a finance hiring problem - it's universal across business support roles:
The pattern is clear: budget for the base salary, but pay 40-55% more in reality.
What if you could access senior-level finance expertise without the $120k commitment?
That's exactly what fractional services deliver:
Here's the honest question most business owners should ask before hiring:
"Do I need 40 hours of this skillset every single week?"
If the answer is no - and for most $2M-$10M businesses, it often is - then you're about to overpay by $60k-$80k annually for capacity you won't use.
Most growing Australian businesses fall into the second category - but hire as if they're in the first.
The next time you're about to approve an $80k hire, run this simple calculation:
= Real Annual Cost: $116,800
Now ask yourself:
If those questions give you pause, you should explore alternatives before you hire.
See Our Cost Comparison Calculator
Payroll tax thresholds vary by state. In NSW, businesses pay 5.45% once total annual wages exceed $1.2M. Victoria has a threshold of $700k, Queensland $1.3M. Check your state's specific thresholds as they impact total employment costs.
Recruitment costs typically range from 15-20% of base salary when using agencies. For an $80k role, expect $12k-$16k. Even without agencies, direct hiring costs (job ads, screening time, interview time) average $4k-$8k.
Most finance roles require 2-3 months for full productivity. During this ramp-up period, you're paying full salary but receiving limited output. Factor this "lost productivity" cost into your hiring decision.
Part-time employees still incur superannuation, leave entitlements, payroll tax (if you exceed thresholds), and most overhead costs. You reduce base salary but the percentage increase from add-ons remains similar (35-45% uplift).
Unlike fractional services, employment costs are fixed. You can't easily reduce hours, pause salary, or scale down without redundancy processes, notice periods, and potential severance payments. This inflexibility can strain cash flow during difficult periods.
Contractors charge higher hourly rates but you avoid super, leave, payroll tax, and equipment costs. For ongoing needs under 20 hours/week, contractors or fractional services are typically more cost-effective than employment.
Scale Suite is a Sydney-based provider of outsourced HR and finance services for Australian SMEs. We deliver payroll processing, recruitment support, employee onboarding, employee development, people and culture support, and fractional HR oversight - all as a fully embedded team that works inside your business.
Employment Hero Gold Partner, CA-qualified, and Xero Certified, we replace fragmented HR processes and reactive people management with one responsive HR function at a fraction of the cost of full-time hires. We serve growing businesses across Sydney, Melbourne, Brisbane, and Perth, with packages starting from $1,500 per month and no lock-in contracts.
Learn more about our embedded HR model at scalesuite.com.au/services/human-resources
Scale Suite is a Sydney-based provider of outsourced finance and HR services for Australian SMEs. We deliver bookkeeping, financial reporting, payroll processing, fractional CFO support, recruitment, employee onboarding, people and culture support, and fractional HR oversight, all as a fully embedded team that works inside your business.
Employment Hero Gold Partner, CA-qualified, and Xero Certified, we replace fragmented finance and HR processes with one responsive, senior-level function at a fraction of the cost of full-time hires. We serve growing businesses across Sydney, Melbourne, Brisbane, and Perth, with packages starting from $1,500 per month and no lock-in contracts.
Considering hiring finance staff?
We'll show you the full cost of an internal hire vs our embedded team, and exactly how much you'd save.
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