When starting a business, how do you have money to pay employees?

Answer 1

When opening a new business, one need to have the capital.

There are 2 types of capital- capital expenditures and working capital. Capital expenditures are one-off payment only, that is before the start of the business such as assets purchases and deposits payments.

Working capital is generally the cash you have to have in hand before you're making profit- to support the operation (including manpower) in the beginning stage. To know the amount, you need to do the cash-flow statements http://en.wikipedia.org/wiki/Cash_flow_statement to identify the maximum value that you have to have.

So, your initial capital should cover both the capital expenditures and working capital- not limited to the former only. You can raise the capital either through savings, loans and private investor. But remember- your capital includes the working capital. Not enough? No business.

Answer 2

You need to start the business with enough capital for operating expenses to cover you during the startup period. You then should pay back that operating capital out of profits from the business.

A business may operate at a loss for some time while it builds clients and may operate with no profit for a much longer time as the operating capital is paid back.

Operating capital is usually the savings of the business owner.

The longer a business can run without a profit the greater its chances to be successful long term. It depends on the type of business though.

Answer 3

You have to pay employees for time worked in the week in which they perform work. You have to have this strategy planned out in your business proposal. You cannot promise to pay workers at a later time because it is against DOL laws. You also have to deduct Medicare and Social Security taxes.

I would suggest you find your nearest Small Business Administration. They will sit down with you and give you a comprehensive detail of what your business is, how much it is likely to make and what you need to do for free.

Answer 4

Generally when starting a business you start with a loan. This is used to pay off employees and budgets, then once your business makes money, you pay it off gradually.

Answer 5

You need a lot of money in the bank to start a business.
Save money first.
You need to work in the type of business that you want to start first to learn the ropes.
Wives and children can be inexpensive employees.

Answer 6

Well, when starting a business, you need to HAVE money to pay your employees. Chances are you won't make a profit for awhile, so you need to have some money stashed away. If you don't want to pay anyone, do it yourself!

Answer 7

Investor. Find an investor or bank willing to fund your startup costs. You will probably need a business pln. Business plan pro is not that expensive and really does a nice job of preparing your plan from a series of questions you fill out at the beginning.

Answer 8

that's a great question. when you start a business, you'd better have enough operating capital (saved up or on loan) to KEEP THE BUSINESS GOING for at least 18 months, which is how long to give a startup to catch on. this includes pay for employees, health insurance, supplies, utilities, etc.

If you are not prepared to go that long, forget it, as it will fail.

Answer 9

If you don't have money to cover pre-break-even period, you are not ready to open a full operation. Better try a partial open and let the customers know that you are still in the preparation stage.
If the business gathering strength on its own, you will soon be a business oowner. Otherwise, close it and no one will notice much.

Answer 10

Um, like yeah. Nobody wants to work for free that I know of.