What Makes More Financial Sense, Employees or a Virtual Assistant?

For small business owners, start-ups and sole traders, the decision between hiring a full-time employee and outsourcing to a virtual assistant (VA) often comes down to balancing the need against the cost.

Does getting an employee make financial sense?

Yes, sometimes it does.

Admit it, you were expecting me to say ‘no’ there and tell you why a VA is a better option, weren’t you? As you will see later in the article, taking the step of hiring an employee is a financial risk, but sometimes it is less risky due to using a VA first.

So yes, when you are ready, an employee is a great idea, but while having an in-house team may seem like the natural next step in growing your business, the hidden costs of employment in the UK are often underestimated. That’s the important factor when it comes to the decision to employ. A virtual assistant regularly offers a cost-effective, flexible alternative with fewer financial risks. The key thing is not whether an employee is the right answer; it is more about when, financially speaking, it is the right move.

Like almost every business decision, when it comes to the choice between employees or a VA, the money needs to be considered above all else.

The cost of employment in the UK

When it comes to employment, there can be a little bit of optimistic accounting sometimes. That is not to say that the business owner doesn’t know what they are planning for. It is just that sometimes the need to employ someone can be the result of an overworked and often overwhelmed business owner, and that can lead to rushed decisions.

When it comes to financial decisions, it’s vital that you consider additional, even hidden, costs. 

All the following are, as you would expect, general costs and your own will vary based on your needs. They do, however, very clearly illustrate the financial considerations.

So, let’s start with the salary itself.

The bottom line is that, if you want an employee with a skillset that will resolve your problem in areas such as administrative functions, bookkeeping or marketing, you are going to need to pay more than minimum wage. Often that will be a lot more, but for this article, let’s be generous and say it’s only £2 an hour above the minimum wage.

• As of April 2025, the UK National Minimum Wage for adults aged 23 and over is £11.44 per hour, so you are looking to be paying £13.44 an hour.
• That equates to a pro-rata or full-time wage of £26,208 a year.

Now you also need to account for additional costs for:

• Employer National Insurance  contributions at £2,361
• And pension contributions at 3% which comes to another £786

So far we are looking at £ £29,355 for a full-time employee.

Now, here is where many people draw a line under costs, but there are more. To get a real view, you need to add in the potential for additional costs due to cover for holiday and sick leave, as well as admin, HR and office overheads. When you put a reasonable amount into the pot to cover these, you see another significant increase.

A reasonable amount to allocate to cost out an employee would be in the region of £31,000 to £34,000.

That is without any further costs for recruitment fees, training and similar.

So, is a virtual assistant more cost effective?

In comparison, the hourly rate of a full-time employee may seem lower than a VA, but it often isn't in practice.

The reason for that is simple: while the hourly rate for a VA may seem higher, you are only paying for the hours you contract them for. Also, the rate quoted is the rate you can depend on and budget for. There are no unexpected changes or additional costs. Our rate is fixed, and we use our own tools, manage our own taxes, and require no office space. You only pay for completed work, and that gives you full budget control

The question you need to ask to produce a real-world comparison is not ‘Is the hourly rate less for an employee?’ It is both ‘do I need to employ someone to do this job, when a VA could offer a fixed cost, and is there consistently enough work to fill the hours for an employee?’.

Some other thoughts on the advantages of a VA

Hiring an employee is expensive, as we have seen, but what if it doesn’t work out?

If you find your VA isn’t working out for you, there is no issue and no further financial outlay. If you end up with a bad hire, on the other hand, you are looking at a very different story.

If a new employee turns out to be a poor fit, either because they are lacking the necessary skills or they are not suitable in some other way, it can have a major impact on productivity, morale, and even your brand reputation. Financially speaking, the cost of a bad hire has been estimated at up to £12,000 for a small business, once recruitment fees, onboarding time, and lost output are considered. Then, you still need to pay to replace them.

Even more worrying is the potential for some kind of complication from having to let that new employee go. Legal, contractual and other problems can arise and be a real headache, as well as costing you a lot in lost time and other costs.

Working with a virtual assistant provides flexibility and a low-commitment path to growth. You can scale hours up or down as needed, test out specific tasks or workflows, and easily end the contract if the working relationship isn't effective. This flexibility is ideal for businesses that aren't yet ready to take on the responsibilities of employment but still need professional support with administration, email management, customer service, bookkeeping, or marketing.

The VA may also prove the need for an employee

If you jump right to employing someone, there is always going to be an element of uncertainty. Are the hours there, what will they do and so on? A VA can serve as a sort of  ‘proof of concept.’ If consistent demand develops for their services, you’ll know that a full-time role is justified. That should give you confidence that an employee will be a profitable move rather than a financial risk.

Hiring an employee offers potential long-term benefits, and there is no denying that when it does, it will mean it is the right move. However, it also comes with a high upfront cost, significant obligations, and, crucially, a financial risk. Virtual assistants provide a streamlined, lower-cost alternative that will allow your business to remain agile, productive, and budget-conscious until you are ready to employ someone permanently.

When the time comes to expand your team, you'll know the demand is real, and just as importantly, you’ll have a clearer idea of the exact skills needed, all thanks to the experience gained from working with a VA.