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Running a recruitment business can be daunting.
We all know this to be true.
After all, recruitment is a tough gig. You know it, we know it – heck, anyone who has had the pleasure of working in this fantastic industry knows the challenges that it can bring.
So when you couple recruitment with running your own business, not only do you have a recruitment business (do you see what we did there?) but you also have an extremely tough & variable challenge to manage.
What we’ve seen, time & time again, through working with the exceptional clients we support is that, out of all the challenges & hurdles that arise, the accounting & back office provisions are always an area that our ventures look to Isotope for support.
So, I don’t know who you are. You may be one of our exceptional clients, a motivated recruiter keen to explore the idea of starting their own agency or just an inquisitive individual keen to learn more about the accounting provisions
Here are some of the frequently asked questions our accounts team here at Isotope get asked day-in, day-out; we’d love for you to take a look & perhaps, in doing so, any concerns you may have about the idea of starting your own agency may dissipate.
Of course! You are able to claim a “Use of Home” Allowance which can be used to cover the uplift in utility bills caused from working from home. The total amount you can claim is currently £26 per month & no receipts or purchase invoices (POs) need to be kept.
Can Isotope help with this? Yep!
In short, either option is absolutely fine. If you opt to pay for legitimate business expenses out of your own pocket or you choose to transfer money into the business, it would be viewed as you effectively loaning the business money. Which means, once the business has income, you can reimburse yourself tax free.
Yippee!
So (again) can Isotope help with this? Yep
So ,there are three main business taxes you will need to pay, which are Corporation Tax, VAT and PAYE.
& then, as an individual, you would then pay Self-Assessment tax on drawings from your company.
It would be the role of Isotope to handle these business taxes for you, ensuring we submit the relevant returns & make the appropriate deductions that ensures you know exactly what tax to pay & when.
It keeps the tax man from your door &, heck, we enjoy it.
So (again) can Isotope help with this? Yep!
The best way to look at VAT (Value-added Tax) is that it never belongs to your business. It’s not yours, it’s not the businesses & in fact, you are just collecting VAT on behalf of HMRC.
Your company will charge VAT to its clients at 20% on invoices and then on most business expenses, you will pay VAT.
The difference between what your company receives in VAT and pays out is then forwarded on to HMRC each quarter. So, as a business you will collect VAT through invoices raised etc & pay-out VAT on business expenses.
It would then be the job of Isotope to calculate & prepare your quarterly VAT returns for you. In doing these calculations (as part of our day-to-day bookkeeping for your recruitment business), we will be able to then let you know what is due to be paid & how & when to make the payment to HMRC.
So (again) can Isotope help with this? Yep!
Corporation Tax is tax on a company’s profits during any given company year.
This is payable yearly and is worked out as your company’s income (turnover less VAT) less allowable business expenses and then multiplied by 19%.
It would be the job of Isotope to ensure that you are kept as up-do-date with what this figure may be during any given month. While we would never know what your actual CT value would be until the end of your company year, we are able to provide an estimation of this in your in your Monthly Management Accounts.
So (again) can Isotope help with this? Yep!
PAYE is the third & final main business tax & this is generated through paying employees – both perm and PAYE temps.
This isn’t an additional tax paid by your company as it is included within the gross salary you agree with an employee. Your company collects this tax on behalf of your employees by deducting it from their payslip (along with the employee’s National Insurance) and then simply forwards it on to HMRC.
Much like the above, it would be the job of Isotope to ensure we make you aware of your PAYE/NI liability per month &, much like VAT payments & the like, making you aware of what to pay & when to pay it.
So (again) can Isotope help with this? Yep!
So, registering for Self-Assessment tax returns is a legal requirement for any Company Owner. Through completely a self-assessment, you are able to declare all of your earnings from your business which then allows for the relevant tax payable to be calculated.
Of course, Isotope will advise you on the best way to structure your drawings from the company as a director, to ensure you are taking money as tax-efficiently as possible (as well as making sure your company has available funds to actually pay you!).
& yes, you may (or may not) have spotted a theme here – Isotope would look to ensure that your personal tax return is produce year in year out for you, enabling Isotope to make you aware of your tax liability.
So (again) can Isotope help with this? Yep!
While we always recommend paying close attention to all of the numbers within the MMA report –if you needed a snapshot of the “most important” numbers, in our experiences they would be:
Capital and Reserves – as this shows how much your company would have available once everything is dealt with. It’s THE number, the “magic number” if you will.
The Corporation Tax, VAT and PAYE creditors – as these will keep you up-to-date with the company’s tax liabilities, both future and current. Fun, fun, fun I hear you say!
Debtors – This represents money owed to your company from its customers. Cash flow & credit control are so important when you are running your own recruitment agency & therefore ensuring the number is as low as it possibly could be is incredibly important. Don’t neglect it!
So (again) can Isotope help with this? Yep!
At least 50% of our ventures run temps at some point during the lifetime of their business & therefore it’s useful to understand what you need to think about – makes sense!
Factoring will play a huge role in helping with cash flow when placing temp staff. This allows you to be paid on your invoices, usually within 24 hours, of them being uploaded to the factoring provider. That way you can pay the temps without having to worry about your end client having paid the invoice.
After factoring, the most important thing to understand is how the temps would operate – i.e. through their own limited company, through PAYE or via an umbrella company.
This is a big topic of conversation &, if you are going to be operating temps, we’d love to encourage you please give us a call and we can support you are legally & physically able to provide temporary workers to your clients.
So (again & for one final time) can Isotope help with this?
Well… what do you think?
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