There are thousands of accountants available in the market that you can choose from for your recruitment agency. You may go with a recommendation from a family member or a friend, go with a small local firm or a large national firm or just search on Google for one that looks like they can do everything you need… but ensuring they have the right skills for your business is vitally important.
The accountant you choose will be preparing your figures for your final accounts and HMRC submissions and 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. Hopefully whoever you choose will be able to provide recruitment specific advice and give you up to date figures but this will often come down to the agreed costs which recruitment directors often begrudge paying for.
TBOS speaks to lots of different size recruitment agencies to discuss the services they are currently receiving from their accountants and below are 5 occasions that we would say they are not receiving the best service:-
- 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 there 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 on taking on more staff or investing in new technology.
- RECORD KEEPING
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.
- GENERAL ADVICE
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 wouldn’t be 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 important for the directors to know. Ensuring your agency is on the correct VAT scheme/frequency, understanding what effects corporation tax and 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 that HMRC will not 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 and it is important to have that conversation with someone who has experience in completing this before. 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.
TBOS provides a daily back office and accounts service for the recruitment agencies we manage. The comprehensive solution 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 provides recruitment specific advice regarding expenses, staff payroll and commissions plus tax efficient ways of directors taking funds from their company. TBOS have a vast amount of experience in recruitment acquisitions and preparing agencies for sales and management buy-outs.