When starting a business, there’s a multitude of things to consider. The chances are you’ve come across a dilemma or two already. But, if you were thinking that the difficult decisions end when things are up and running, it’s time to think again.
In truth, every route in business leads to another crossroads. Just when you think you have things under control, you’ll again find yourself facing a dilemma. Such is the face of the business world. In some ways, you could look at this as a good thing. Each decision is a new opportunity to get your business off the ground. As such, one wrong decision can always be undone by a right choice the next time around. These endless possibilities keep things fresh, exciting, and, well...possible.
Early decisions include what to call your company, how to brand yourself, and which business space to choose. Then, you move on to one of the most critical choices of all; which employees should you hire? And, the work here doesn’t end when you have an office full of people. You then have to think about how to pay them. It may sound simple, but there are more options here than you might think. Each one could have a significant implication on finances, and also team morale. For proof, we’re going to look at some of the payment crossroads, and consider which choices may work best for you.
Salary vs hourly
The first question to ask yourself is whether you want to pay a salary or an hourly rate. It may not have crossed your mind before, but getting this right is essential. For the most part, the right way to budget depends on your industry, and what you’re expecting from your staff. But, before we go into that, let’s look at what each payment time actually is.
A salary is a form of payment which involves a yearly sum, split into equal amounts. In general, it’s based on a 2080-hour year, though employees may work over or under this, and still receive the same amount. While a contract is required for an agreement like this, timesheets and sure aren’t necessary.
An hourly rate is what it says on the tin. Employees clock time worked, and get paid accordingly. For the most part, employees working hourly will have a different workload each week. They also have to be paid for any time spent working, including overtime. Though, if they work less than a 40-hour week, you won’t have to pay them for it.
So, that’s a summary of the two. But, how do you know which would best? As mentioned above, a lot of this depends on your enterprise. Often, office workers or those in higher pay brackets receive salaries. This is a sure way to save yourself money if your staff usually stay behind and finish jobs. Fields such as teaching also rely on a salary format, as it ensures you can account for school holidays and such without having to pay out more.
By comparison, hourly work is most often suitable for shift workers, in practical service fields, or within the retail sector. This more flexible pay suits shift work better, as you aren’t required to pay out for time not spent working. Thus, you could save yourself money, while also ensuring that you can play with the rota as and when you need to.
So, take a moment to consider the nature of your company. It should soon become clear which would work best.
Timesheet vs clocking in
If you do opt for an hourly rate, you need to find a reliable way to track the time your employees spend working. Failure to do so could lead to pay discrepancies which will cost you in the long-run. You do, after all, have a legal responsibility to pay for hours worked. If you fail to do that, employees are well within their rights to take legal action. So, think about which method of tracking hours would work best for your company. Most commonly, businesses opt for either timesheets or automated clocking systems.
Both have their plus points and can be challenging to decide between. Timesheets are a more traditional method. They’re often long-winded and rely on colleague honesty. Plus, you would need to allow time for your employees to fill these out each day, which some would argue is a waste.
By comparison, clocking in/out machines require employees to swipe a magnetised card when they enter or leave the building. Those hours are then logged straight to your system in a hassle-free tracking method. That said, this isn’t without fault, either. Machines are always open for error. Worse, you wouldn’t recognize a mistake like this because everything's automated.
For the most part, you just need to consider whether you value time or accuracy. You could, of course, take to checking the hours logged on your automatic system. Equally, you could turn to companies like the one found at https://fieldpoint.net/, who can help to integrate your timesheets into a workable system. There is no right way of doing things here, so try a few methods out, and see which work best for your budgeting.
Weekly vs monthly
Last, but by no means least, you need to decide whether to pay staff monthly or weekly. The majority of businesses do opt for monthly payments, and there are many good reasons why. For one, there’s often a charge each time payroll goes out. So, paying once a month makes more financial sense. On top of which, most benefits and such go out on a monthly basis, so will be easy to automate with this payment method. That said, as can be seen from sites like www.reddit.com, there are benefits to other options, too. Mainly, employees favor a weekly payment rate. So, choosing to go against the grain in this way could set you apart for bagging the best team members. Consider, then, whether the best staff are worth a more expensive payment method.