Your business is growing and you’ve recently taken the decision to hire employees. Now you have to ensure they all get paid. Depending on the nature of your business, payment options will vary. Here are some basic tips to help you decide which way to go about payday.
Time-rated or commission-based?
There are two main methods of payment – a salary and commission.
The salary is fairer for all, everyone is paid equal to the amount of hours they do regardless of their performance. Those wanting to earn more can work more hours. If your business receives a steady income, a salary is more ideal.
Commission is getting paid for specific tasks. If you are a handyman company, commission may be more appropriate for your staff, as different jobs will pay different amounts (plus some weeks you may have more hours than others). Commission can also be used to encourage competition. It is popular in sales jobs, providing workers more of a motive to sell. All in all, it is better for more volatile jobs where a steady flow of money into the business is not always likely (or where results of the job can vary).
Cash-in-hand, check or digital?
Next you will have to decide in what format to pay your staff. Time-rated pay can always be done digitally – unless it is a paper round, most people will prefer it digitally so that they know it’s ‘on the books’.
Cash may be better for some commission work in which you are paid for your services in cash such as a cleaning job or market stall work. You can then divide up the cash at the end of the day and give it to your workers.
There’s rarely ever a reason to pay workers by check. However, when paying other businesses for one-off services, such as electricians or plumbers, and the amount of money is too much to pay in cash, checks can be useful (so it pays to have some quickbooks checks handy).
Overtime and bonuses
On top of regular pay you may wish to reward certain workers for going the extra mile. It is not compulsory to pay workers overtime, but many companies do – especially if it is covering for another worker who hasn’t turned up. Bonuses can also be a great way rewarding good workers for exceptional service who might otherwise be paid the same as not-so-good workers on a time-rated pay system. Give your workers something extra to aspire to!
Invoices and payslips
You will have to keep documentation of each of your transactions. If workers are freelance and pay their own tax, they may have to file an invoice to you before getting paid. If you handle their tax, you can pay them automatically whilst also offering a payslip. This serves as receipt to show you and them how much has been paid. You can make or buy physical payslips, although most companies have now turned digital offering their payslip as an email or as a private webpage when logged in through a server.