SHOULD YOU BREAK UP WITH YOUR ACCOUNTANT?
Historically, an accountant was someone you hired (or inherited from a family member) and they stayed with you forever with the famous saying...
'You are more likely to leave your wife than change your accountant!'
However, the reality of the modern-day accountant is something completely different, with them now providing strategic and financial advice to companies to maximise their profits. If your accountant is not providing you with all of the services explored below, it may be time for you to source an accountant more specific to your industry.
UNDERSTANDING THE VALUE OF A RECRUITMENT ACCOUNTANT
Many recruitment directors (especially directors of new start-ups) will often engage with an accountant who can provide them with basic services such as VAT returns and year end accounts, preferably at the cheapest cost they can find. Unfortunately, these directors do not see the real value in figures and are happy to base their financial position on just the money in their bank account and future billings.
TBOS wouldn’t recommend this type of basic accountancy service, especially for a new start up. It’s incredibly important to be aware of your tax responsibilities and finances within your chosen industry. If your accountant is not giving you industry-specific advice on tax or management accounts on your recruitment business, you are not able to make important decisions to ensure your business grows year in, year out.
WHAT YOU SHOULD BE LOOKING FOR IN A RECRUITMENT ACCOUNTANT
Regular Management Accounts
The services that recruitment agencies should be looking for from a good accountant are things such as the provision of regular/monthly management accounts to show the directors what profits they have actually generated, the costs of the business and any liabilities currently due to HMRC. As long as these are produced early enough each month then a director can use these figures to make business decisions such as hiring new staff, investing in new technologies (CRM system, website upgrade, etc.) or expanding offices.
Specialist Accountancy Advice
A good accountant will also be able to discuss the figures that they have produced and give help and advice on ways of improving on what they can see from the company performance, cost savings that can be made on any company expenditure and tax efficient methods of taking funds from the company. A good accountant may also help with producing company projections that meet with a director’s vision for the agency and give the business a track to follow compared to their actual performance during the year.
VAT Scheme Support
These accountants will also look to provide additional support on VAT returns by ensuring the agency is on the correct VAT scheme (cash accounting, flat rate, etc.), are on the correct VAT frequency (monthly, quarterly or annual). They will also ensure that the VAT on placements is accounted for correctly so that the directors understand this within their cash flow and the maximum amount of VAT is reclaimed.
Relevant IR35 Advice
A good accountant should also provide help and advice on changes in legislation that may affect the recruitment agency, at no additional cost to the agency. This may have previously included help and advice on Intermediary reporting, changes in taxation on dividends and IR35 compliance for Public Sector contractors.
Efficient on Producing Year-End Accounts
Finally, a good accountant, if they are producing regular/monthly management accounts, will ensure that producing the year end accounts is quick and simple as the majority of the figures have already been confirmed. This will also allow more time to have discussions about the distribution of dividends and any tax planning for the company.
HOW TBOS CAN HELP
TBOS provides full comprehensive back-office and accountancy services to recruitment agencies which includes providing monthly management accounts, VAT returns and all year-end statutory accounts, including intermediary reporting. TBOS believes it is important for recruitment directors to fully understand and be aware of their true company figures so they can make business decisions to grow and develop their business. TBOS also has 10 years' experience in providing accounts services to the recruitment industry, this allows us to provide specific advice relating to changes in legislation and ensures our clients remain informed and their business compliant.