Industry sector: Manufacturing

Factory based: Wages

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.

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. A lot will depend on the nature of the goods you are planning to produce and whether your business will be labour intensive or highly automated.

It is likely that you will need different types of employee, for example:

  • operatives, who may or may not be highly skilled
  • administrative staff
  • sales staff, telesales staff
  • staff to maintain plant and machinery
  • drivers
  • staff to make up and pack orders, receive and store raw materials and generally undertake a range of jobs

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.

Don't forget:

  • you might use both full and part-time staff
  • there might be opportunities to use out-workers
  • you may need to take on temporary staff at busy times
  • 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 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
  • employers with an annual payroll bill of more than £3 million must pay the Apprenticeship Levy

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.