The Accounting Department Blog

Being Compliant from Day 1

In the fourth blog of my series “Starting your own recruitment business”, let’s take a look at how to ensure you are compliant from day one.

If you are setting up a recruitment business you will most likely have many years of experience as a consultant under your belt and will be familiar with certain aspects of compliance, by ensuring that your candidates are well looked after. For example, checking that they have completed their safety inductions or that they are being paid under the appropriate awards. But being the Director of a business is a whole different ball game – you are now personally liable for any breaches in compliance.

Below are some of the most important elements of compliance to get right when starting your own business.

1.    Get advice from independent industry experts

Meeting your compliance requirements is not something you will want to get wrong – the penalties are severe. It is vital that you seek advice from independent experts who specialise in your industry, to ensure that you are meeting your statutory obligations right from the start.

You should consult:

  • A reputable tax accountant – someone who is experienced in managing the taxation for recruitment businesses. They can advise you on setting up your business structure correctly, managing any international contractor issues (if applicable) and can guide you through the process of registering your company if you have any questions along the way.
  •  An insurance provider who is experienced in managing insurance requirements for your industry – workers’ compensation, public liability and professional indemnity to name a few.
  • A lawyer -  consider if any of the proposed shareholders or employees will require the services of an expert in industrial relations.

2.    Register with ASIC

The Australian Securities & Investments Commission is an independent federal government organisation responsible for the regulation and enforcement of corporate legislation to protect Australian consumers, investors and creditors, and should be your first port of call when registering your business.

You will firstly need to complete a search of the ASIC Connect database to ensure that your chosen business name is available. If your chosen name is available you will then need to register your company – this involves nominating your company officeholders, shareholders and setting up your share structure. These details should already be outlined in your business plan, but your tax accountant can help you with getting this right.

3.    Insurance requirements

You will need to obtain a Workers Compensation Insurance policy in every jurisdiction that you will have people working in. You should seek advice from an insurance provider who specialises in the recruitment industry – Arthur J. Gallagher is one such company. 

In addition, you should familiarise yourself with the Workplace Health and Safety (WHS) legislation for each jurisdiction you will be operating in. At the time of writing this, all jurisdictions except for Western Australia and Victoria have adopted harmonised WHS laws and regulations under the Model WHS Act.

WHS legislation can change frequently, and at the end of the day it is up to you as Director of the company to stay up to date with changes in legislation, and to seek advice from independent industry experts when necessary to ensure that you remain compliant. 

4.    Taxation Obligations

Once your company is set up and registered with ASIC, you will need to register for an ABN and for a Tax File Number.

To determine which tax registrations are applicable to you, please refer to the ATO website, which outlines the criteria for each of the following:

  • Goods and Services Tax (GST
  • Fringe Benefits Tax (FBT)
  • Pay As You Go Withholding (PAYG)

You will also need to determine whether you are required to pay payroll tax in each jurisdiction you operate in. The Payroll Tax Australia website has more information regarding the thresholds applicable to each jurisdiction. 

5.    Superannuation

The penalty for not paying superannuation on time is one of the most severe that a business may suffer. Superannuation not paid on time, even by only one day, can result in a penalty known as the Superannuation Guarantee Charge – which is equal to the amount of superannuation not paid by the due date, plus interest, plus administrative charges.

To ensure that you are set up to manage your superannuation obligations from the beginning, you need to select a default super fund, into which superannuation payments can be made when an employee has not nominated their own fund. This will ensure that you are meeting your statutory obligations by paying the superannuation on time. 

We use Kinetic Super as our default fund, as they specialise in the recruitment industry and have a clearing house that is free to use – this allows the employer to make a single online payment that is then distributed between their employees’ individual super funds. You can read more about why we love using Kinetic Super in my related blog.

The compliance requirements listed above are by no means an exhaustive list, but they should give you an idea of the main statutory obligations that you must be meeting from day one.

If you would like to receive a copy of my comprehensive business setup checklist, please click here.

 

 

 

 

 

Posted By: 
David Payne