[ascjim]

This is to help people.

If you don't like the fact that people want to do better then you, then don't read it.

Originally posted at: http://purewash.blogspot.co.uk/

The cost of employing.
There are many people out there getting incorrect information when it comes to the true cost of employing and its putting them off.

On some forums, I've seen some extremes that you need to earn x5 the employees wage to be able to cover the cover the cost.

This is rubbish.

What I intend with this post to reassure want-to-be employers that employing your first member of staff isn't as costly or hard as they think.

Everything in this post is from my experience of employing.

Anyone in any field can use this post to work out their employment costs.

I will be writing a second part of this post for the window / gutter cleaning industry next week.

So, what costs do we need to consider?


Wages

This is obvious. As I write this the current national minimum wage (2015-2016) is: £6.70 for anyone aged 21 and over.

For this example we will pay our new member of staff £7.00 per hour.

£7.00 x 40 working hours per week = £280.00

Employers national insurance
Currently, this is rated at 13.8% for employees over 21. The first £156.00 of wages per person per week isn't subject to this rate.

£280 - £156.00 = £124.00 (£124.00 is now subject to the 13.8%)

£124.00 + 13.8% = £141.11 - £124.00 = £17.11

Total cost per week: £17.11

Pensions
I have no experience with this yet, as my company doesn't need to set anything up until 2017. (this was written in early 2016)

For more information please visit: https://www.gov.uk/workplace-pensions/about-workplace-pensions

Payroll

I don't see the point in doing this yourselves to save a few quid.

For me, my accountant charged me £37.00 a month for my books and an extra £7.00 per month for each employee.

I highly recommend having an accountant when your employing as it can save time that money can't buy back.

£37.00 + £7.00 = £44.00 ÷ 4 = £11.00

Holiday pay
Each employee is owed 28 days holiday a year total.
Using the same example of £7.00 per hour for our new employee = £56.00 per day x 28 days = £1568.00 ÷ 52 weeks = £30.15

So you need to earn £30.15 per week to pay for your employees holidays. Not as bad as you thought?

Insurance
Employers liability insurance cost is different in each field.

My public liability covers everything that is worked on. Not all policy's cover this, so make sure you read the small print.

My current employers and public liability is £45.75 per month.

£45.75 ÷ 4 = £11.43 per week.

The basic cost of an employee per week.

Wages: £280.00
Employers national insurance: £17.11
Accountant and payroll: £11.00
Holiday pay: £30.15
Public and employers liability: £11.43

Total: £349.69

÷ 5 days

= £69.93 per day.

Easy peasy right?

Next is to work out the other running costs of your industry. I will be writing next week about the extra running cost in the window / general cleaning industry.

Also, I will be making an in-depth video of this post soon, so please subscribe to my YouTube channel so you don't miss it.

https://www.youtube.com/channel/UCpcOZbe7ZEm8WNRiUFi3opQ

[Shane sharples]

Awesome post James 👍

[p1w1]

Yeah really great post mate really helpful.

[8weekly]

Although it doesn't include the other associated costs - van, fuel, insurance etc, assuming they are out on their own.

[Smurf]

Although it doesn't include the other associated costs - van, fuel, insurance etc, assuming they are out on their own.

Nor includes recruitment, training, workware, ppe costs and most importantly employees going sick,  being unreliable, doing shoddy work, upsetting customers, ripping the firm off and all the hassle that goes with employing people especially when being paid low wages.  It's not as simple as people make out it to be which can put a lot of people off employing surely?

[NWH]

James a superb post look how easy that was to put down useful useable information that applies to quiet a few people on here,best post I've seen for a while well done.

[MNWC]

Candidate for post of the year. Something that this forum's been lacking for a few months.

 

[KS Cleaning]

This is to help people.

If you don't like the fact that people want to do better then you, then don't read it.

Originally posted at: http://purewash.blogspot.co.uk/

The cost of employing.
There are many people out there getting incorrect information when it comes to the true cost of employing and its putting them off.

On some forums, I've seen some extremes that you need to earn x5 the employees wage to be able to cover the cover the cost.

This is rubbish.

What I intend with this post to reassure want-to-be employers that employing your first member of staff isn't as costly or hard as they think.

Everything in this post is from my experience of employing.

Anyone in any field can use this post to work out their employment costs.

I will be writing a second part of this post for the window / gutter cleaning industry next week.

So, what costs do we need to consider?


Wages

This is obvious. As I write this the current national minimum wage (2015-2016) is: £6.70 for anyone aged 21 and over.

For this example we will pay our new member of staff £7.00 per hour.

£7.00 x 40 working hours per week = £280.00

Employers national insurance
Currently, this is rated at 13.8% for employees over 21. The first £156.00 of wages per person per week isn't subject to this rate.

£280 - £156.00 = £124.00 (£124.00 is now subject to the 13.8%)

£124.00 + 13.8% = £141.11 - £124.00 = £17.11

Total cost per week: £17.11

Pensions
I have no experience with this yet, as my company doesn't need to set anything up until 2017. (this was written in early 2016)

For more information please visit: https://www.gov.uk/workplace-pensions/about-workplace-pensions

Payroll

I don't see the point in doing this yourselves to save a few quid.

For me, my accountant charged me £37.00 a month for my books and an extra £7.00 per month for each employee.

I highly recommend having an accountant when your employing as it can save time that money can't buy back.

£37.00 + £7.00 = £44.00 ÷ 4 = £11.00

Holiday pay
Each employee is owed 28 days holiday a year total.
Using the same example of £7.00 per hour for our new employee = £56.00 per day x 28 days = £1568.00 ÷ 52 weeks = £30.15

So you need to earn £30.15 per week to pay for your employees holidays. Not as bad as you thought?

Insurance
Employers liability insurance cost is different in each field.

My public liability covers everything that is worked on. Not all policy's cover this, so make sure you read the small print.

My current employers and public liability is £45.75 per month.

£45.75 ÷ 4 = £11.43 per week.

The basic cost of an employee per week.

Wages: £280.00
Employers national insurance: £17.11
Accountant and payroll: £11.00
Holiday pay: £30.15
Public and employers liability: £11.43

Total: £349.69

÷ 5 days

= £69.93 per day.

Easy peasy right?

Next is to work out the other running costs of your industry. I will be writing next week about the extra running cost in the window / general cleaning industry.

Also, I will be making an in-depth video of this post soon, so please subscribe to my YouTube channel so you don't miss it.

https://www.youtube.com/channel/UCpcOZbe7ZEm8WNRiUFi3opQ

Also worth remembering that as they are making you money, you in turn are making money for the tax man, in effect you may well be passing over 29% of any profit they earn you.

[Jack Harris]

probably the best post I've actually seen on here! looking forward to part 2 James 

[robbo333]

Very well explained. Thank you.
Robbo

[NWH]

You VAT registered James.

[Rich Wilts]

Although it doesn't include the other associated costs - van, fuel, insurance etc, assuming they are out on their own.

Nor includes recruitment, training, workware, ppe costs and most importantly employees going sick,  being unreliable, doing shoddy work, upsetting customers, ripping the firm off and all the hassle that goes with employing people especially when being paid low wages.  It's not as simple as people make out it to be which can put a lot of people off employing surely?

This is it. I understand the need for the initial post but whats in that post are the bare bones of what it costs and theres plenty more to consider. Theres all sorts of other costs in my experience that haven't been included; these are slightly less obvious and require a bit of time to realise.

[NWH]

Ah ripping people off there's my favourite subject 8 weekly will say,at least James has outlined a rough guide which is more than you can say for certain posts-threads. At least he didn't say I employ and it's off to the land of the fairys when the money's rolling in month in month out all he needs to do is keep getting the work eh.

[Jonny 87]

Great post.

Really appreciated.

[Smurf]

Talking about ripping people off https://www.youtube.com/watch?v=c_2zx0SDpJc
Waving a 60 foot stick about in the middle of a road has got to be worth more £7 per hour surely 

Put it another way James would you want to clean that premier inn building for only £7 an hour yourself ?
I don't know how you can sleep at night  mucker and I'm betting the lads on the pole also did not get much sleep with the pain they where in afterwards...Shame on you 

[richard groves]

Talking about ripping people off https://www.youtube.com/watch?v=c_2zx0SDpJc
Waving a 60 foot stick about in the middle of a road has got to be worth more £7 per hour surely 

Put it another way James would you want to clean that premier inn building for only £7 an hour yourself ?
I don't know how you can sleep at night  mucker and I'm betting the lads on the pole also did not get much sleep with the pain they where in afterwards...Shame on you 

that takes me back, been there and done the same for somebody else

[Smurf]

Talking about ripping people off https://www.youtube.com/watch?v=c_2zx0SDpJc
Waving a 60 foot stick about in the middle of a road has got to be worth more £7 per hour surely 

Put it another way James would you want to clean that premier inn building for only £7 an hour yourself ?
I don't know how you can sleep at night  mucker and I'm betting the lads on the pole also did not get much sleep with the pain they where in afterwards...Shame on you 

that takes me back, been there and done the same for somebody else

Barry, I'm betting it did not take you long to say stick yer job where the sun don't shine either 

[Clever Forum Name]

Excellent post.

However getting people to stay around at £7 per hour must be hard.

With fuel and everything else you must be looking at a good £450-£550 per week.

[windowswashed]

Good post, forgot to mention sick pay when they're not earning for you but you are having to pay out for them and maternity and paternity leave as well. Doing wages is a doddle if you have the relevant books to work out the scales.

[JSMC]

has the makings of a good thread. Hopefully people can be positive about it.