There are thousands of accountants available in the market today who are happy to manage your recruitment accounts and reporting. The accountant you choose may be based on a recommendation from a family member or a friend, or a small local firm or a large national firm that you have found on online.
With that said, many recruiters will not realise they should go for an accountant that specialises in recruitment to ensure they receive the best accountancy service for their money…
The accountant you choose will need to prepare your figures for your final accounts and HMRC submissions, they should also be giving you helpful advise and information on how to run your company in the most effective way for tax and auditing purposes. Additionally, the accountant should be able to provide recruitment specific advice and give you up to date figures on your business, however this will be excluded from the agreed costs which recruitment directors often begrudge paying for.
As TBOS speaks to many different sized recruitment agencies about their current accountancy services, we thought we would list 5 occasions where we would recommend sourcing a specialist recruitment accountant for their agency:-
LACK OF MANAGEMENT ACCOUNTS
Management Accounts are the best indicator for any recruitment agency to see how their agency is performing and the overheads of their business. They also provide key information about HMRC debts due and can be used to track the incomings and outgoings of the company. We speak to many prospective agencies who do not get these on a regular basis (some do not get them at all) and have no idea on how their company is performing. If an agency receives their management accounts on a quarterly basis, 6 monthly basis or only in the form of their year-end accounts it can be very hard to justify making key decisions each month like taking on more staff or investing in new technology.
When most accountants produce their figures they will be working from a pile of invoices, expenses and bank statements on transactions and information which has already happened over the past month or quarter. If there are any issues or mistakes made during the month (or quarter) these will be picked up way after the transaction has occurred.
If you are using a standard accountancy firm who not only look after your agency but also the local butcher, baker and candlestick maker then the advice you may be given may be very generic and not recruitment industry specific. Having an understanding of invoice finance, contractor/temp revenues and recruitment specific legislation could mean that the agency figures are not showing the correct gross profits or overpay on contractor funding.
LACK OF TAX PLANNING
The recruitment industry is a growing industry where consultants, directors and companies can make large profit margins in a very short space of time and having an understanding of what taxes are due and what can affect them is vital information directors need to be made aware of. Ensuring your agency is on the correct VAT scheme/frequency and understanding what effects corporation tax as well as the best way to take profits from the company (and the personal tax liabilities due on those) is vital to ensure there is sufficient cash in the business – And so the HMRC doesn’t come knocking on your door.
END GAME DISCUSSIONS
Every recruitment director has a different plan on what type of agency they want to grow, how they will do this and their exit strategy. With that said, it is important to have that conversation with someone who has experience in completing this for other like-minded professionals like yourself. By not planning this in advance can often set back any plans or end up costing you money to change company structures later on down the line.
HOW TBOS CAN HELP YOUR RECRUITMENT BUSINESS
TBOS provides a daily back-office and accounts service for many recruitment agencies we have on our books. Our comprehensive solutions includes daily bank and invoice finance reconciliations, recording of supplier invoices and expenses, production of monthly management accounts and reporting, VAT returns and year end accounts. TBOS also provides recruitment specific advice regarding expenses, staff payroll and commissions plus tax efficient ways for directors taking funds from their company. With over 10 years’ experience in recruitment acquisitions and preparing agencies for sales and management buy-outs, we are the number one specialists in our industry.