Money that you take from the business to cover your own personal living expenses is known as 'Drawings'. This should not be included here - it is dealt with elsewhere in the cash flow.
Depending on the size of the business you intend to operate, you may be thinking of working alone, or employing extra staff. If taking on staff, bear in mind that it is important to preserve a quality reputation by employing skilled and experienced workers. Before you can make an estimate of the wages you will pay each month to your employees you will need to identify the work that must be done and how many people will be needed to do it.
You might need staff to:
- carry out electrical installation work, rewiring and safety checking work
- do certain specialist tasks, such as work on solar panel installations
- do time consuming and repetitive work like portable appliance testing
- do basic labouring work, such as clearing up, and more advanced work like chase cutting, drilling, and installing trunking and conduit
- see to administrative tasks such as answering the phone, dealing with customers and keeping business records
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.
- you could use a combination of full and part-time staff - possibly agency staff if you need them
- you could take on and train young workers as apprentices - perhaps through the CITB Construction Apprenticeship Scheme
- your employees will need to be properly trained in safe working practices, such as working safely on live electrical systems, using power tools and working at height
- you will need to provide employees with appropriate protective and safety equipment where necessary - for example dust masks and ear defenders for drilling and chasing
- the National Minimum Wage Act sets a minimum amount that you must pay your staff. Workers aged 25 and over receive a Living Wage premium on top of the standard National Minimum Wage
- there is employment legislation that 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. To operate the CIS scheme you'll need to register with HMRC for online services to deal with returns and subcontractor verification. From April 2016 all CIS returns must be sent to HMRC online and they no longer accept paper returns. From April 2017 HMRC will no longer accept telephone verification so you'll have to use the online verification service.
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. You should also include here the cost of staff pensions.