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.
Decide first whether your business will need any employees. Many paving jobs are much quicker and easier for two people working as a team, so you may well need an assistant or labourer. Think about the size of business that you want to run. Do you intend to have several teams of pavers, a sales force and perhaps even a showroom? Or will the business be on a much smaller scale? Perhaps you intend to start off small and build up gradually.
Before you can make an estimate of how much you will pay in wages each month, you will need to identify the work that must be done and how many people will be needed to do it.
You might need employees to:
- do basic labouring work and jobs such as carrying and clearing up
- work alongside you, doing the same sorts of jobs as you do
- survey sites, measure up and produce designs, plans and drawings
- operate plant and machinery, for example an excavator
- do specialist jobs that you can't do yourself
- do telesales work or 'cold calling'
- work in a showroom, or perhaps on a travelling 'roadshow' display
- drive your business vehicles
- answer the telephone and attend to administrative tasks
The wages you pay your employees will depend on their level of experience, and also 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.
- you could use a combination of part time and full time workers. You could also use the services of sub-contractors from time to time
- you could take on and train young workers as apprentices - perhaps through the CITB Construction Apprenticeship Scheme
- it is common to pay sales staff a basic wage which is topped up by commission paid each time they make a sale
- the National Minimum Wage Act sets a minimum amount that you must pay your staff, including sales people who work on commission. 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
- special rules apply within the construction industries for paying sub-contractors
For an outline of the Construction Industry Scheme (CIS) which affects the way you pay sub-contractors, ask your HM Revenue & Customs (HMRC) office for details. Further information is also available on the HMRC section of the Gov.uk website.
If you intend to pay commission to your sales force, think about how much it will be. It is usual to pay them an agreed percentage of the value of each sale, and perhaps an additional bonus when they reach an agreed target. Be sure that all your sales staff understand the ins and outs of fair trading regulations.
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.