Industry sector:

Tool hire: Wages

Money that 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.

Depending on the size of the business you intend to operate, you may be thinking of working alone, or employing extra staff. If you plan to take on staff, bear in mind that it is important to preserve a quality reputation by employing skilled and knowledgeable 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.

Staff duties

You may need staff to:

  • answer the phone and take hire bookings
  • deal with and advise customers, answer questions and demonstrate how to use tools safely
  • take the hire charge, deposit and customer's details
  • deliver and collect large pieces of equipment
  • check, test and clean returned tools between hirings
  • repair and service tools as necessary
  • order new tools and consumables
  • keep the 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.

Don't forget:

  • you could use a combination of full and part-time staff
  • your employees may well need training
  • 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

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.