Employment

[sainty]

Hi

I'm after some more advice.

What does the board feel about employing someone? I am getting bogged down at the moment by some work that is repetitive and relatively easy. It makes pretty good money, and will last for the rest of the year. The problem is I cant really grow as a business whilst I'm spending so much time on the boring stuff. I've got a property that I'm trying to do up where I was going to be turning my skills to all sorts of interesting stuff by I haven't had the time and now I'm having to sub out the work which is starting to p##s me off. I'm also concerned about having all my eggs in one basket.

So who do I employ? 40/50 something, school leaver, graduate that wants to work with their hands, someone with a young family that would be keen and wants security? I'm not sure whats best and dont want to get stuck with someone that's not suitable. So I'd just like to hear some of your stories about employing people.

I'm not even sure whether I need to get someone who is a qualified joiner/chippy but will cost more but will enable me to get more work?? And whats the going rate for qualified/unqualified labour at the moment?

rgds

Sainty

[jfc]

I always seem to lose out when i take people on so now i just give the work away . Saves me the hassle of running a job i dont have time to do and keeps the customer happy that you have sorted someone out for them at no extra cost .

[sainty]

That's what worries me JFC, I don't want to lose out. However, I do really need to get some help or I'll end with no business at the end of the year if I dont get the same contract next year.

[engineerone]

in the short time, subbing would seem the way to go for the boring work. remember, all the add on costs of direct employment, and also how difficult it is to sack people when the work dries up.

why not offer day work??? and see if you can then build a relationship with someone and then go on from there?

paul

[9fingers]

Stuart,
i have a mate who is a one man band (in a differnet business to you) but when he had an overload he subbed work out to another such one man band but found it was not done properly and all had to be re-done at my mates expense.
Given that situation again he would give the work away much as jfc now does.

If you took on a lad as an assistant say part-time to help you work quicker then perhaps you could maintain quality but save time to spend on other things.
Not up with latest employment law but I guess you need to make sure you can let him go if your situation changes.
I use contract effort to help with bulges in work but sub it out in small fixed price packages to control my risk exposure. this means if some of my salaried staff run short of work I can drop the contractor to feed them instead and that no possible employment rights are conferred on the contractor - He likes it to for IR35 reasons.

regards

Bob

[jonnyd]

Hi I have one employee who is semi skilled and i have found it easier to train them to do things as i want them done rather than having a qualified joiner who has there own ideas and usually wants to do things there way. I pay an average wage for my area but offer a share of the profits so if we both work hard we both benefit.

Jon

[jfc]

I agree with the share of the profit thing . The one job that did come off well for me was the refurb on the Hammersmith Palais ( I still need to put that old sign above my workshop door ;D ) I got three other carpenters and told them what my price was , also told them i was not risking losing my house for the job and would not take it on unless we all agreed to work for that price . We finished on time and all earnt good money . Even better money when we carried on with all the extras they added . Opened the club on time aswell Howard spooner was the owner at the time , couldnt meet a nicer down to earth bloke .

[blacksheep]

I would tend to agree with Jason - if you've got more work than you can handle, give it away and keep the most profitable/interesting work for yourself. If a particularly big one-off job comes along that you fancy, get subbies in.

The costs and hassle of employing someone are horrendous. Nearly everyone I know who has ever done it regrets it and wishes they had stayed a one-man-band.

The other thing to consider is VAT. Most self-employed tradesmen bumble along quite happily with a declared turnover below the threshold for VAT registation - currently £67,000. Take someone on and inevitably your turnover will have to rise above this and you will have to start adding VAT onto all your invoices.

This is well worth avoiding if at all possible! Particularly if a high proportion of your work is direct to the public, who can't claim it back.

Rgds
Phil

[sainty]

Thanks for al the help guys.

I dont think that I can let the "boring" work go, like I say its good money and will provide me with a good income for the rest of the year. Also, if all goes well, it might act as a starter for more varied work from the same people. From a quality control point of view I would like to keep it in house as this is the best way of demonstrating the quality of the work that I can produce. Its just the eggs in one basket situation that I'm uncomfortable with.

Jonnyd, I like your model of semi skilled labour/profit share. Do you find that the profit share works a a real incentive? When your working on your own and you have a deadline you just get the work done, I'd hate to get a clock watcher who left me at 4.30 if things were getting tight.

I hadn't considered the VAT thing. There must be people here that have gone through the same situation and are quite "happily" VAT registered? What are the implications of VAT registration for a carpenter/joiner that mainly works direct for the public. Do you have to charge VAT on labour and materials? Oooh, bit of a minefield I think.

Still this time next year Rodney.........




Sainty

[beech1948]

sainty,

I run a small IT company so I'm just a hobby woodworker but I do in my company use a lot of contract labour and charge VAT.

There is no need to be scared of VAT. You would simply charge VAT on the total costs of your job eg. Invoice price + 17.5% so that means that ALL costs +profit are VATable as you are delivering a service. The advantage is that VAT on ALL consumables and materials that you use can be deducted from this VAT to give a net figure to the VATman. So ALL VAT on wood, sheet materials, petrol, rent, heating, lighting, tea, insurance, electric etc etc etc etc. can be recovered by your company.

In practice the only crap about VAT is the admin as you do need to stay on top of it on a weekly basis or whenever you pay your bills.

When I employ contractors I use the following method:-
1) INterview to check they have two eyes, two ears and a nose holding in place a good brain
2) The contractor works hius first week as normal with pay but at the end of the week I decide if he is to continue or not depending on his ability, fit to job, fit to my culture
3) I occasionally take on teams of 5 to 6 and I do these as a first meeting which sets out the expectations of late hours, long days, maximum effort, that I will fire anyone who is not performing up to scatch and offer a basic pay plus a bonus (10%) for completion on time and to client budget.

I have found that being clear, up front and brutally honest with them all has provided a very good set of relationships which have lasted well. About 15% of the staff have had to be let go as not sufficiently good at their jobs. This has never caused any problems with the remaining people.

As I said above, I'm in a different field but the issues are identical. If I can help any let me know. Pm me for a telephone number.

regards
Alan

[lofty]

What part of the country are you in Sainty, someone on here might be able to help you out

[blacksheep]

Apr 16, 2008 7:53:47 GMT beech1948 said:

There is no need to be scared of VAT. You would simply charge VAT on the total costs of your job eg. Invoice price + 17.5% so that means that ALL costs +profit are VATable as you are delivering a service. The advantage is that VAT on ALL consumables and materials that you use can be deducted from this VAT to give a net figure to the VATman. So ALL VAT on wood, sheet materials, petrol, rent, heating, lighting, tea, insurance, electric etc etc etc etc. can be recovered by your company.

The problem with VAT in our trade is that the bulk of one's sales invoice is for labour, whether your own or an employee's.

Take an example;

You make a sideboard for a retail client for an agreed price of £1000.00.

The cost of the materials are £150 +VAT = £176.25

Your overheads for the week it takes to make are £100 +VAT = 117.50

Your profit for the week is £706.25. Not bad...


Now if you register for VAT;

You now have to account for VAT in your selling price 1000/1.175 = £851.06

But you can claim back the VAT on your costs.

Your profit for the week is 851.06 - 150 - 100 = £601.06


Therefore simply by registering for VAT you are over £100 a week worse off.

Ah, some might say, simply ADD VAT to your £1000 selling price and you'll be quids in.

True...

... but if you can get £1175.00 for your sideboard why not just charge that much anyway and stick the extra £175.00 in your back pocket?

All perfectly legal and above board.

Rgds
Phil

[sainty]

Phil, that's what I was thinking. As most of the invoice is made up of labour you lose out. Presumably though you are not paying income/corporation tax and make a bit back on that? Is there anyway around this?

Lofty, I'm in Southampton..if there's anyone out there that can help I'm open to offers!!!

Rgds


Sainty

[blacksheep]

Apr 16, 2008 19:22:02 GMT sainty said:

Presumably though you are not paying income/corporation tax and make a bit back on that? Is there anyway around this?

Surely you are not suggesting that I evade income tax?

I resemble that assertion!

I assure you that I account for every penny that I declare.

[sainty]

In all honesty, Blacksheep, no I wasn't! It just seems that once you go VAT registered you suddenly lose a great big lump of income. Its like stamp duty, once you reach a certain level of income suddenly your tax bill takes a great big hike.

[engineerone]

yes it is important to remember that you CANNOT recover Vat from your internal labour costs. only on materials and services that you get charged vat on.

the major problem like so much in this country is when you are on the cusp of a transition point.

for those turning over 87,750 you have to be registered, but your costs go up in a dramatic way, so it is worth charging a little less to stay below the threshold.

unless you know you are going to go above the threshold by say 20% it is worth re adjusting your prices to ensure that you stay outside the net.

remember it is perfectly legal to get the customer to provide the materials and thus pay the vat themselves.

paul

[blacksheep]

For a small concern basically selling labour, registering for VAT involves a big step in costs of perhaps £5 - £7.5k per year.

If you plan on expanding the business further it's unavoidable, however if you plan on staying at around the same size it is well worth staying under the threshold.

Phil