Are you ready to start up your new recruitment agency?
The answer’s probably yes – but if the enquiries TBOS receive are anything to go by, out of the large number of new agencies launching this year, a handful go into it believing something they shouldn’t.
So what misconceptions should you shake if you hold them?
Limited Companies are £15 Each Online
Technically, this is true; there are companies online you can buy your first limited company from – but it’s very likely you’ll be missing your Articles of Association, your Memorandum of Incorporation, and maybe even the share certificates.
That can make your first several years’ paperwork a nightmare.
Banks Will offer Free Banking for a Year
The answer to this one is “Sure, but how much do you think is included?” You’ll usually find that old school processes – cheques, telephone banking, etc. – are free, but full access to online banking systems with multiple accounts and international payments isn’t included.
Be ready to budget for these extras!
You Can Use Those Contracts from Your Old Agency
One of the most common beliefs is also the most thoroughly false. Using your former agency’s contract set is theft, so you face legal issues. If your contracts aren’t fully compliant or up to date, they may open you to liability, too. You should expect to buy a fresh set from a reputable provider – it’s an essential investment.
You Don’t Need Insurance If Nothing Bad’s Going to Happen
Some deals will require a minimum level of cover, and some forms of insurance are required by law. Take the time to meet with an insurance broker who has recruitment industry experience to make sure your boxes are ticked – but start with the lowest level that covers you, and increase it as larger contracts require it.
Joining an Association is Essential
It’s definitely useful if you expect to make the most of their services, but it’s not a requirement to trade, and it can be an extra cost you don’t need. Join if it makes financial sense; don’t if it isn’t.
Who Needs VAT Registration?
It’s not a legal requirement until your turnover hits £82,000, but being able to reclaim the VAT on your start-up costs makes it very useful to a fledgling agency – and you’ll seem larger than competition without a VAT number which can be its own benefit.
You can Claim Your Home as an Office Expense
Again, this is technically true but misleading – your HMRC claim allowance is around £18 per month because it’s only expected to cover costs above normal living expenses. You won’t save nearly as much as you thought.
I’ll Be Able to Take Money as Dividends
There’s a very simple test to see if this is true:
Are you turning a profit?
If you aren’t, they class as Director’s Loans and will have to be paid back within 9 months of year’s end or they’ll incur additional taxes. Current UK taxation also means the gap between dividends and PAYE is smaller than it used to be, too.
If you’d like to get to the truth behind any of these misconceptions, you’re very welcome to get in touch with us on our form, at enquiries@tbos.co.uk, or over the phone on 0845 881 1112.
