Paying staff a fair wage on time is a vital element of business, no matter the size of a company. Failure on the part of the employer to pay staff can have catastrophic consequences for employees, many of whom rely heavily on being able to get paid so that they can keep on top of bills themselves. If your business struggles to pay staff on time, the problem must be rectified by looking at local bookkeeping service that will be able to assist you each month.
But what is the best way to pay staff? Is it more advantageous for your business and staff to pay hourly or a salary? Are there business advantages of paying one way or another?
Paying an Hourly Rate
An hourly rate of pay means that your staff will be paid a set amount for each hour that they work. There are many advantages to this method. If for some reason an employee does not complete a full week’s work, they do not need to be paid. Also, if a staff member is not required to work in certain periods of the year, you will not be left paying for a member of staff that you do not actually need. This method allows for flexible hours to be worked and is relatively easy to calculate.
On the other side of the coin however, paying an employee hourly requires their monthly hours to be calculated manually each month.
An experienced bookkeeper will be able to keep on top of hours worked and make sure that your staff are paid on time and exactly what they are owed. These services can save you valuable time so are worth investigating.
Paying an Annual Salary
Paying an annual salary is perhaps the easiest way of paying staff. Paying a salary is easy to calculate: a fixed annual amount is evenly spread over the payroll months. Due to its simplicity, it is time friendly and saves on administrative costs. Employees also benefit from knowing exactly how much they will receive each month, allowing them to plan ahead financially.
However, the problem of a salary is it does not take into account overtime. Working out and then paying overtime can take away some of the time saved by having a salary pay scheme.
Additional Help and Advice
Paying your staff is extremely vital. Whichever way you pay your staff, it will take up a considerable amount of time each month. One way to overcome this problem is to employ an outsourced bookkeeping service who will take away the hassle of multiple calculations and working out tax and National Insurance contributions. These services can make a huge difference for pushed employers.