Compliance Unpicked: Payroll Compliance Tips for New Recruitment Firms

15 August 2023

Shelagh Ward - Sales & Marketing Manager

Shelagh Ward

Sales & Marketing Manager

Starting any new business requires a laser-sharp focus on finding customers and serving them well. Anything that detracts from that focus, particularly in the first 12 months of trading, is bad news if you want to stabilise and grow.

Unfortunately, with a new recruitment business, compliance is one of those issues that requires your best attention from day one.

Whilst you’ll want to spend all your time looking after your clients, you’ll be putting your new venture at risk if you fail to address the need to get robust systems and processes in place to ensure compliance.

There are different rules and regulations to be aware of according to how you pay workers. And whilst it’s a headache you likely don’t want, remember that recruiting temporary labour can be much more lucrative than focusing on permanent placements, so the effort is worth it. And, of course, you can always turn to the Workwell team for the services and support you need.

Here, we outline the main compliance issues you need to address early on.

Compliance when placing construction industry contractors

Like IR35 compliance, you’ll need to check carefully before placing anyone who will be paid via the Construction Industry Scheme.

Whilst each worker must be individually registered for CIS, the onus is on your business, as part of the labour supply chain, to ensure it is appropriate for them to work this way with each assignment they take on.

The matter revolves around whether each project can be undertaken in a genuinely self-employed way. Our sister company, Crest Plus, has specialised in CIS since the scheme began and has the most robust contractor assessment process available to protect both workers who they pay via CIS, and recruitment businesses which place contractors into roles.

Compliance when placing limited company contractors

If you’re recruiting limited company contractors, the main issue you need to be concerned about is IR35 compliance.

You’ll need to play your part in ensuring workers have the correct and valid status determination statement (SDS) which verifies the role is correctly assessed to be ‘outside’ IR35 and that the role is and continues to be ‘outside’ IR35 in practice.

Sometimes an SDS may be undertaken by an end client and provided to your recruitment business. At other times, you may need to undertake the relevant assessment of the role before, during and after placement. You can get all the help and advice you need from our IR35 experts and you can get assessments undertaken via IR35 Complete™, our online assessment tool which provides insurable outcomes.

If the SDS deems the role to be ‘outside IR35’ this means the worker can genuinely fulfil the role through their limited company, also known as a Personal Service Company (PSC) and your company and other members of the supply chain are not at financial risk. If the role is ‘inside’ IR35 then it may not be appropriate for the contractor to operate through their PSC, and the role will need to be fulfilled via an Umbrella company instead. This option can be facilitated very easily via IR35 Complete™, linking it to your chosen CRM/VMS – the process is seamless, allowing you to focus on growing your business.

Note that if you are paying workers off-payroll you need to complete intermediaries reporting – again, we can handle this on your behalf if we are your chosen payroll partner.

Payroll management for contractor placements

Contractors will need to be paid and this can be time-consuming and risky for your new business. Payroll compliance needs to be understood and addressed at an early stage. For ‘inside IR35’ contractors, you may need to find a good Umbrella company to partner with as they can take on all employment responsibilities on your behalf.

Alternatively, you can process payments yourself but running your own PAYE system can be a hassle – you’ll be responsible for ensuring payments and payslips are accurate, and you’ll need to make RTI submissions properly and on time.

You can do this in-house with the right payroll software, which we can provide. Alternatively, you can fully outsource the task to our expert team or opt for a 100% funded and full back office solution which means we pay PAYE workers compliantly and your agency margin at the same time as well as raise your invoices. This type of solution will also advance the funds plus VAT to your Umbrella company partners and pay limited company workers, so it really does solve a myriad of issues.

How can we help?

Starting a new recruitment business isn’t easy. The most important thing to focus on is growing your client base. With Workwell by your side, your attention need not be detracted by compliance issues. Speak to a member of our expert team today and let us provide the advice and services you need to be successful.

As well as compliance support, we can help you with all the funding and back-office services you need, and our approach will grow with your business. Find out more about our support for start-up recruitment businesses.

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