Payroll and Overhead

Payroll and Overhead

When it comes to running a business, there are a lot of numbers involved. So many numbers you might not even know how to count them all. You have to use numbers for products and prices and overheads and payroll and this and that. Do you know what numbers go where? When running a successful business, you have to either know, or be able to figure out how much of your revenue and profit can go where. If you get a high profit, you need to know how much of it to spend and how much of it to put into savings. This will help you determine how much you need to put toward restocking products and how much should be allocated to paying your employees? There is rarely ever a steady answer, rather a steady range to stay in. Each week will bring in different profits and revenue, so you have to be able to adapt.

While we can’t go over the entire business plan with you, we can help you in the area of payroll, and the areas that branch off from there. The amount you should plan on spending a week for payroll depends largely on the kind of business you run. In a retail business, you may tend to spend only between 15%-30% of your revenue on payroll because you have products to replace as well. In a more service based company, where your employees deliver a service directly you might expect to pay more toward 30-50% of your revenue since your employees are more prominent to the company. Some service based companies actually spend over 50% of their revenue on their employees, depending on what industry they are in.

Why is this important to keep a track of? Can’t you just see how much money you are spending a week and go from there? It is important to know how much of your revenue is going where because it shows trends in your revenue, and whether it is steady or not. If you pay your employees roughly the same amount each week, keeping their hours consistent, yet they are taking up 20% of your revenue one week and 30% the next, then you  can tell you had a bad week. If this kind of decrease is consistent, it shows you that you need to start making some changes to how you are running your business. Maybe cut back on your employee’s hours, or find a more proactive way of stocking your inventory.

If you don’t know how to keep track of these numbers, outsourcing to a company like Vision H.R. can help you handle your payroll and keep you informed about all the numbers and statistics you need, when you need them. The people behind Vision H.R. make it their duty to understand the numbers that help keep your business above the water and going steady. From there, you have the freedom from all those payroll numbers to move your company forward.