Small business owners are often faced with the challenge of paying employees in times of financial hardship. While finding extra funds to pay employees can be difficult, getting a business loan can help you. A business loan can provide the funds necessary to cover employee wages and ensure that your staff is paid on time.
A business loan can provide peace of mind that you can pay your employees on time.
If you are a sole trader operating your business alone, paying employees is not something you need to worry about. As you are the business's sole owner, it is down to you what wages you take for yourself, if any.
If you're a limited company with a small team of employees, you'll need to consider how and when you'll pay them.
You could be at a stage where you are happy with your team and their wage, but are looking to expand and wondering whether you can afford new hires.
Here we give you some insight into your options regarding how and when you pay your employees, and what to do if you struggle to do so.
If you need to evaluate your staffing costs but are experiencing a cash flow issue, a business loan can be a great help. Employee satisfaction is vital. You can borrow the money you need to keep your staff happy in their role, as well as invest in the business to increase profits.
As an employer, you are obliged to pay your employees a wage. This is the law.
However, if you're looking at performance-based pay such as tips, bonuses or commission, this is at your discretion. You may find that offering employees a bonus or commission structure is a better option than just increasing their base salary. That way, they have the potential to earn more if they are performing well and you, as the employer, can save money by not having an increased overhead.
Different ways to pay staff are reliant on the type of work they are doing and the agreement you have with them. Hourly workers are paid their wages each time they work, while salaried employees may receive a regular payment over an extended period (usually monthly).
Performance-based payments can also be used, where you reward employees for exceeding certain targets.
Finally, commission-based payments are common for sales staff, where they receive a percentage of their sales as pay.
Whether you pay your staff hourly, on a salary, or include performance based-incentives is your choice.
You must ensure you pay staff promptly as it is illegal to pay employees late in the UK. The Working Time Regulations 1998 state that all employees must be paid at least the national minimum wage and at least once a month on or before their payday. If you do not follow these regulations, you may face fines of up to £5,000 per employee for each offence.
Ultimately, it's important to have an open dialogue between employers and employees about their wages and what they need to feel fairly compensated for their work. This could involve conversations about bonuses, commission structures, promotions or other benefits that may be available. It's helpful for both parties to come to an agreement to ensure a healthy working relationship.
You should communicate any changes with staff pay to avoid confrontation down the line.
Small business owners may struggle to pay their staff for a variety of reasons. Short-term cash flow issues can make it difficult to cover payroll expenses, and the current economic climate can make it even more challenging. If you run into an unexpected bill or repair near payday, this can throw everything into disarray.
Additionally, many small businesses don't have the financial resources or access to traditional lending that larger companies do. This can make it difficult to access the funds necessary to pay employees. Finally, the cost of hiring and retaining talented employees can be a challenge for small businesses, especially if they don't have the resources to pay competitive wages.
Luckily, we specialise in fast, short-term funding that can help you access the funds you need to keep everything in order.
By utilising Love Finance's services, business owners can find new ways to keep their staff paid and their businesses running smoothly. If this is something you're facing, enquire with us today and see if your business is eligible.
