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| Ek's Home | Forum | Chat | Electrical Links | |
| Subject - Officers Wages | |
| Mike Delaney | I'm the owner of an electrical company. I pay myself a salary. My time working is spent bidding jobs, ordering materials, wiring houses, service, basically everything. My question is when I help some of my guys wire a house or do some job, do I count my time on the job...cost wise...or should I just include it in my overhead expenses? |
| zol_man | wow, you pay youself! :) i seem to be doing it wrong. i just seeem to get what is left over. very good question. we should be paid what we are worth. that entails charging a higher price for a greater valued service. |
| John A. Peters | Yes, your time with the tools on i.e. Tool Belt Work, as opposed to supervision, it counts as direct labor! If it is a T&M job then it is billable time. If it is a bid then it is charged against the GL for that job when you are figuring your job cost profit. You do job cost your jobs don't you? You need to know the percent profit on each job so you can tell which ones are good and which ones are better and then go for the better job and find out what is bad about the lesser performing jobs (You men can tell you, but you have to know which jobs are good and which are not so good first!) |
| ecarbine | Mike,I run a small upstart company so I do all the office work as well as working on the tools much of the time. I pay myself a small salary as the president of the company $1500 a month. We do strictly service work and so my guys get paid a percentage of each job, and I take that same percentage for my self on the jobs that I complete myself |
| John A. Peters | What percentage is that? What City or area and state is that? What is union scale there? Ho much does the VW dealer charge there? We charge about 79% as much on contract work for home owners and 82% of the VW retail rate on service calls and about 100% as much on emergency calls. Yes that is right currently we are charging more on contract jobs than on service calls. I think this is because the contracts are flat rate (line item assembly prices) and the service calls are T&M. It looks to me like this shows that I need to switch my service calls to flat rate. John |
| Mike Delaney | Sorry to be redundant, or even a little ignorant. If I include my officer wages in my 30% overhead figure, when I wire a house by myself (or any bid job for that matter), Cost of material X 30% overhead, subtract sum from total bid = profit VS. cost of labor (employees wages) + material X 30% overhead, subtract sum from total bid = profit. My wages in theory would already be acounted for by the overhead amount, even though that figure is low, every job is figured @ 30% overhead?? |
| Mike Delaney | ecarbine, That dosn't sound like much of a salary. How often do you do tool belt work? I've heard business owners paying themselfs a small salary, and at the end of the year wright themself a BIG bonus check...for tax reasons?? Whatever floats your boat. Do your guys make a salray in addition to the percentage? |
| zol_man | ecarbine, what are the percentage rates that you have worked out for your guys for service calls? how did you establish these nombers. i have been working on this myself but have not come up with a working model yet. thanks for the info, |
| ecarbine | Mike I have the tools on every day, even with the office work that I do I am still averaging about $800 a day worth of work. I take each ticket, subtract materials cost and pay myself or my guys 25% of the balance. So figuring $800a day, and I try to keep my material costs to about 20% I am making about $150 a day or so on top of my salary. Plus I am blessed with a wife who makes a good salary too so that makes it a whole lot easier when I am not out producing revenue. I have only been going for about 6 months, as the business grows and my advertising comes out and calls start coming in I will move into the office full time and adjust my salary accordingly, right now though I dont want to take much out of the company, I want to continue to re-invest. |
| ecarbine | zol, I actually have a sliding scale that is based on the parts percentage average, if a guy can keep his materials cost to less than 25% i will pay him 25% but if his average is above 25% then he only makes 20%. That is paued to him as apercentage of the balance after materials are deducted. I dont figure the percentages on each invoice but as a percentage of all of his weekly invoices combined. Another model is to pay your guys an hourly wage based on the amount of volume that they bring in each month. I dont know where you are at but I am in Utah and an average electrician should bring in about $15000 a month in gross volume. Below that level they would be paid about $18 per hour From $15000 to $20000 in volume they would be paid $20 per hour. From $20000 to $25000 they would make about $25 per hour. If they are producing over $25000 per month you would probably want to negotiate a deal with them to ensure that they never want to work for anyone else ever again. |
| zol_man | e, do your guys bid the jobs themselves out in the field? what flat rate program are you using? do you have a "menu" type pricing structure? I am trying to simplify the quoting at the customers location, removing myself from the loop. i only have 2 guys and i keep a regular job working for someone else. it is difficult to have to monitor pricing with my guys always calling me. We have tried to come up with a price structure based on previous work and labor hours, but still seems to fall short. thanks for your reply, Carl |
| ecarbine | I dont yet gave my flat rate pricing in place. We give a price before we start the job but it is based on a bid that myguys give at the home. I am lucky to have guys that know enough and have been doing it long enough to acurately bid the jobs and make the right kind of profit margin. I am however actively trying to find a good flat rate system, so if anyone has any suggestions that would be cool. |
| kbsparky | Mike: A business owner can realize some significant tax benefits if incorporated as an "S" Corp. The profits from S Corp activity pass-thru as "distributions of income" or "dividends" directly to the share holders. That way, you avoid any payroll taxes on that portion of your income. Since the IRS will frown on you if you don't take at least SOME salary, it makes sense to take a stipend amount as salary -- paying payroll taxes on those amounts -- and then take the rest of the profits directly. |
| John A. Peters | quote: To see how you are doing, try using a spread sheet and do a what-if study. What-if you paid your self the same rate as a union electrician gets and if you paid your wife at a competitive rate would the remaining money be positive or negative? Be brave and share the result with us and we can all learn. |