Can I Afford to Hire Another Employee?

Affording another employee isn't just about whether this month's revenue could cover a salary. It's about whether the business can sustainably cover the full on-cost — wages plus super, leave, insurance and payroll tax — through its normal ups and downs, without the new hire quietly eating into the cash reserve every time trade is a little slower than usual.

Start with the full annual on-cost of the role, not just the advertised wage. There's no single reliable percentage that applies to every hire — the actual uplift depends on the role, the applicable award, your industry, your state or territory and your own circumstances — but it should include compulsory superannuation, workers' compensation insurance, payroll tax where it applies, and any award-specific allowances or overtime. Paid annual leave and personal/carer's leave are generally already built into a salaried employee's pay rather than an extra cost on top, but they do reduce the working hours you're actually receiving for that cost — which matters for coverage and capacity, even though it isn't a separate dollar figure to add.

1. Calculate the full annual on-cost of the role, not just the wage.

2. Divide it by 12 to get a genuine monthly cost, including the payday super component.

3. Check it against your average monthly gross profit, not revenue — gross profit is what's actually available to cover overheads including wages.

4. Stress-test it against your worst recent month, not your best one. Could the business still cover the new cost in a quiet month?

5. Build it into a forward cash-flow forecast for the next 6–12 months, factoring in your existing obligations — rent, loan repayments, tax set-asides — alongside the new cost.

A useful reframe: the question isn't just “can I cover the wage,” it's “what does this role need to produce for the business to come out ahead.” That might be direct revenue (a salesperson, a tradesperson doing billable work) or it might be freed-up capacity (an admin hire that lets you spend more time on higher-value work). Either way, having a rough sense of the expected return — not just the cost — turns the decision from a feeling into a calculation.

• You're consistently turning away work or missing opportunities because there simply isn't capacity.

• Your own hours are being spent on tasks well below what your time is worth to the business.

• Revenue has been growing steadily, not just in a single strong month.

• You've modelled the full on-cost against a conservative, not optimistic, revenue forecast, and it still holds up.

• The extra workload is a temporary spike, not a sustained pattern.

• Cash flow is already tight, and the hire would rely on revenue that hasn't materialised yet.

• You haven't modelled a slow month — only your current, busier one.

• A cheaper alternative — a contractor, a casual hire, or better systems — hasn't been considered first.

• Have I calculated the true annual on-cost of this role, not just the salary?

• Does it hold up against my worst recent month, not just my current one?

• Have I built it into a forward cash-flow forecast, not just checked today's bank balance?

• Is the demand for this role sustained, or a temporary spike?

• you want the full on-cost and affordability calculation done properly before making an offer;

• you're choosing between a contractor, casual or permanent hire and want the trade-offs explained;

• you want a cash-flow forecast built specifically to stress-test the new cost; or

• you're close to your state's payroll tax threshold and want to understand the impact of crossing it.

→ How Much Does an Employee Really Cost My Business?

→ How Do I Build a Realistic Business Budget?

→ Why Are My Sales Growing but My Cash Getting Tighter?

SKC Accounting | Knowledge Centre | Knowledge Guide 035

Last reviewed: August 2026

General information only. This guide does not take into account your individual circumstances and is not a substitute for professional accounting, taxation, legal or financial advice.