Chris' answer is most thorough. In my 30 years of running businesses, I've always separated the two functions.

The [paranoid?] concern I have with this question is that, without oversight, it's easy for bookkeepers to embezzle. Just make sure you have mechanisms in place to deal with that.

First, I'm glad your employee feels comfortable enough to ask; most folks are too scared to even pose the question.

I think this is an opportunity to show your true leadership skills and probe: there may be an underlying problem that you don't know about but he might want to share and you could help.

I've run businesses, created startups and done turnarounds for over 30 years. I like people and I think businesses are great places for people to learn and grow.

So, why not ask..."Hi, Jim, about that early raise...right now, I don't see a problem but may I ask what's going on that prompts this need? Perhaps, there's a better way to solve a problem and I'd feel good about helping you." Get him to open up and listen.

Once you've heard what needs to be said, you might creatively go about solving the problem that needs fixing. As I said, this is a great opportunity.

And, if he's shopping around for the "right" pay grade, maybe there's something missing for him in the job. Find out what it is.
Electrical company? Supplies or are you doing electrical work?

Call or write for clarifications.

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