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Building upon one of our more recent articles (where we explored some of the practical tips from recruitment entrepreneurs when it comes to launching & running their own agencies); in today’s article, we’re focussing on 6 recruitment accounting startup tips from recruitment accountants.
Recruitment accounting superstars focussed solely on supporting exceptionally talented recruiters within their own agencies; it’s not just part of what they do, it is what they do. Recruitment & recruitment only; it’s really that simple.
Which means that, over the years & years of being so fortunate to work with so many exceptional recruitment startups & provide them with all the accounting & back office support necessary to help them grow their own agencies (which of course only forms part of the comprehensive support Isotope look to provide), it’s safe to say we’d have to be idiots to have not picked up a few tips when it comes to truly understanding the accounting functions within your recruitment startup.
So, what are the 6 recruitment accounting startup tips our recruitment accounts have for you today?
Whack out those notes on your iPhone or that pen & paper (if you’re of a certain demographic!…) & enjoy.
As a recruitment startup, there are a number of taxes that your business will be subject to & as a result, you ought to be aware of. We tend to break these down into (what we like to call) generic tax obligations – in other words, taxes that affect every trading recruitment agency – & those slightly more sector-specific obligations that only the agencies within those particular sectors will be subject to.
Our advice? It’s incredibly important to understand the obligations that you & your recruitment agency have when it comes to taxation within your recruitment startup. It’s simply too important to ‘put to one side’.
& we mean truly understand it. Not just how to spell it, but what it is, how it works, when it’s paid, why it’s paid & how it’s calculated. Not only will this ensure that you & your business remain in the good books of HMRC, but you’ll also begin to understand some of the additional financial benefits that come with running your own limited company.
Our advice? If in doubt, ask. You need to understand what VAT is & the impact it has on your business on a day-to-day basis. Can you ‘get by’ without understanding it? Of course… but you didn’t start your own recruitment agency just simply to ‘get by’, did you?
More specifically, understanding the importance of efficiently structuring your earnings as a Director within your business. Ensure you understand the breakdown between salary & dividends, the timings around when to draw money from your business – heck, all the way down to “how” to do it!
Our advice? Think about this way; you are now both an employee & shareholder within your recruitment agency (heck, you might be the only one of both on Day 1!), which means that the way you structure your earnings needs to leverage both to ensure you’re getting well, as the team here like to say, “the best bang for your buck”!
What do we mean by the “real value” within your recruitment startup? Surely the mantra is simple… make as much profit as you possible can & everything else will take care of itself? Yes & no. While we admire & applaud that recruitment startup mindset (& can empathise with it wholeheartedly!) but there’s more to understanding the true value of your recruitment startup than “just” profit.
Our advice? Make sure that you take the time each month to sit down with your accountants & go through your Monthly Management Account. This should be produced for you on a monthly basis & supplied within (we would say) the first 10 days of the next month. Take the time to sit down & review the document; it will continue to further contextualise what’s really important in your recruitment startup.
As the cheesy American motivational speaker would say, repetition is the mother of skill; this is nowhere more clearly shown than in the monthly, weekly, heck daily conversations you ought to be having with your accountant within you recruitment startup. One of the easiest ways to keep those regular touch points well, regular is through your MMA.
Our advice? Over time you will become obsessed with your MMA. & we mean obsessed. A true & current understanding of your financials will allow you to make the most informed & most suitable decisions for your recruitment startup – so make sure you spend time pouring over them & become as obsessed with them as our accounts team are.
If you were to ask the majority of recruitment business owners what one of the elements of success within their recruitment agency really is, I’m sure you wouldn’t be surprised to hear “growth” on the tip of their tongues. There’s something about building your recruitment startup to the point of being ‘hire ready’ that is both challenging & exciting. But what does that really look like when we look past the romance & to “the numbers”?
How about a rest? After all, there’s only so much accounting jargon you can digest in one sitting (we know!).
There are so many things you might feel inclined to do “next”; one could be having a chat with one of the team here at Isotope? Perhaps it’s reading through some of the other articles Isotope have produced, perhaps it’s delving into some of the recruitment startup tips from seasoned entrepreneurs who were once in the position you’re in today, or perhaps it’s working through a recruitment startup checklist because there’s simply no time like the present.
Perhaps you had some follow up questions you wanted to ask? If so, maybe it might be worth talking to Jordan Kennerley over on LinkedIn – we know he’d love to help.
Whatever you’re “next steps”, the question is always the same – what’s stopping you?
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