When starting a new business for the first time there are countless different elements to consider. As your business begins to grow, it is inevitable that you will need to take on a team of talented employees to help you manage the workload. For small business owners who may not have experience with salaries and payroll before, it can be difficult to decide exactly what you should pay each of your team members.
However, it may come as a happy surprise that, according to The Guardian, many people now prefer the prospect of a “good life with a standard amount of money” over a life driven solely by money.
But as a first-time business owner, how do you ensure that you get it right? We’ve put together our top pointers of exactly what you need to consider when it comes to allocating staff salaries across your company.
Create a Business Budget
It probably goes without saying but before you can decide on any individual salaries, you must first plan your overall business budget. This is usually separated into two categories: a capital budget and an operating budget. Capital budgets are for necessities, such as payment for office space and essential new equipment. An operating budget, projects how much it costs to run your business over the next year and includes expenses for materials, sales, production, and staff salaries. For smaller organisations, initially, it can be useful to unlock funding by leveraging your assets to improve your cash flow and help you to expand the business.
Allocating Staff Salaries
When it comes to deciding on what to pay individual staff members, there are a number of methods you can undertake. Some businesses like to set salary brackets where each role sits within an overall band. Once an employee has worked their way up within the business over time, you can then move them up to the next salary bracket as reward for their promotion. This creates motivation and incentivises hard work and dedication across your team. There are also lots of online salary guides where you can access what other businesses are paying staff members for the similar roles. These can be a helpful guideline if you’re unsure.
Laws Surrounding Salaries It’s important to be aware of the legalities surrounding the allocation of individual salaries across your business. Learn the difference between exempt and non-exempt employees. Exempt workers tend to get paid an annual salary at a fixed hourly rate. Non-exempt workers are entitled to minimum wage and overtime pay. Do the relevant research to ensure you know what category your staff members fall within. There are also many laws surrounding elements such as contract of employment, working hours, sick pay, holidays, dismissal, and redundancies. To be crystal-clear on the legal parameters involved, the official GOV website can provide you with all of the relevant information that you may need to know before hiring new staff members for your business.