Money which you take from the business to cover your own personal living expenses is known as 'Drawings'. This should not be included here, but will be dealt with elsewhere in the cash flow.
Give some thought to the extent and nature of the work that will need to be done on your farm and consider whether you need to employ anyone to help you. If you ran your farm before converting it to organic, you are likely to already to have employees (or know that you don't need any). However, you may find that the change to organic means you have to employ more or different kinds of staff. For example, you may decide to market your produce yourself through a farm shop or farmers' market or online, and you might need employees to help you achieve this.
The wages you pay your staff will depend to some extent on what is the going rate in your area. The Annual Survey of Hours and Earnings (ASHE), which is carried out by the government, gives average weekly wages (national and regional) for a wide range of different types of job. The Survey is available online on the Office for National Statistics (ONS) website.
If you decide to employ workers, their exact duties will depend on the nature of your enterprise. You may find that you will employ part-time workers at certain times of the year, for example during harvests or if you decide to rear turkeys for Christmas.
If you intend to make direct livestock sales to members of the public, think about who will be dressing the carcases. You could pay the abattoir to do this but you may find it more cost effective if you or someone else from the business acquired the necessary butchery skills so that this could be dealt with in-house. Also, you may find that you need someone to take telephone orders from customers, although you could get round this by using mobile phones and/or providing a fax, email or online ordering system.
If you are planning to supply local businesses, it is likely that you will need someone to make deliveries.
You may find that you need to employ someone to market your produce. This may involve telephoning or visiting local retailers, butchers and catering establishments to make them aware of your products.
When calculating employees' wages, don't forget that if appropriate:
- you could use a combination of full and part-time staff. Part-time work is often attractive to parents with children at school. You may find that the amount of admin and clerical work does not justify employing someone on a full time basis
- the National Minimum Wage Act sets a minimum amount that you must pay your employees in England (the Agricultural Wages Order that used to set minimum wages in the agriculture sector in England and Wales was scrapped from 1 October 2013. The Welsh Government has set up its own Agricultural Advisory Panel to set agricultural minimum wages in Wales and there are separate Agricultural Wages Boards in Scotland and Northern Ireland that set minimum wages in the agriculture sector). Workers aged 25 and over receive a Living Wage premium on top of the standard National Minimum Wage
- there is other employment legislation which you should be aware of
- you will have to pay employer's National Insurance Contributions (NICs) and you will have to operate PAYE in 'real time'. You may have to make employers' minimum contributions to an auto-enrolment pension scheme too
In the cash flow, just put the amounts you will actually pay to staff after you have deducted NICs and PAYE - you will show these separately.
Include here the cost of staff pensions.