(Construction Recruitment Agency- Master the CIS from day one!)
Let’s be honest, building a business in construction recruitment is a bit like putting up a skyscraper. Looks great at the top, but if you don’t get your foundations right? It’ll all come crashing down pretty quickly.
So before you chuck on your high-vis and start firing out your contractors’ CVs left, right and centre, let’s talk about the unsexy but essential stuff that’ll save your headaches later on.
Because, trust us, nothing kills momentum like unexpected HMRC letters, panicked calls to accountants, or your contractors kicking off because their pay’s been messed around with. And it will happen if you don’t get the basics in place from the get-go.
The Basics Without the Boring
One of the first boxes to tick? Getting yourself sorted with the Construction Industry Scheme (CIS). It’s been around for over 50 years, so it’s hardly new and definitely not going anywhere anytime soon. Basically, it’s the government’s way of making sure the taxman gets his slice before anyone else. If you’re placing CIS contractors and most agencies in the construction game are then you’ve got to play by the rules, or risk getting slapped with penalties.
Here’s what you need to do before you even place a single brickie:
- Register as a Subcontractor under CIS
- Register as a Contractor under CIS
- It’s important to have the right documents in place for the relationship with the end client and the workers.
Understanding CIS Status – And Why It Matters
Once you’re set up, you’ll fall into one of three categories when it comes to CIS tax. And where you land will massively affect your cash flow, so pay attention:
- Not Registered
Didn’t bother registering? Big mistake. Clients will hack 30% off your invoice and send it straight to HMRC. Not ideal when you’re just trying to pay your contractors. - Under Deduction
You did register, but haven’t hit the threshold yet. Clients deduct 20% before they pay you. Manageable, but still something to factor into your margins. - Gross Status
This is the golden ticket. If your turnover’s above £30k per director (or £100k for the company), and you’re playing by the rules, you get paid in full and you handle the tax yourself. Lovely.
Checking Contractor CIS Status Online
You don’t need to be a tax wizard to keep on top of this. Just hop onto the HMRC Government Gateway, pop in the contractor’s UTR (Unique Tax Reference), and you’ll see their CIS status. Super Easy.
Also worth noting, any deductions you do have to make can be offset against your PAYE liabilities the following month. Just make sure your accountant’s not asleep at the wheel. Better still, get one that knows recruitment inside out.
Let’s Talk Cash
Now, let’s get into the meat of it: money.
If you’re using an invoice finance provider (and lots of agencies do, especially at the start), be aware that they’ll often offer you prepayment based on net receivables and not your full invoice amount. That means less cash in your pocket up front. And if you haven’t planned for that, it could get harder than your hard hat.
So keep an eye on your cash flow like a hawk. Forecast. Budget. Know what’s coming in and when. It might sound dull now, but future-you will be buying past-you a pint for thinking ahead.
Final thoughts
Look, no one gets into recruitment for the admin. But sorting this stuff early, you’ll save yourself a mountain of stress later. You’ll also look slicker to clients and contractors, and that kind of reputation travels fast (especially in construction).
So lay those foundations properly. Tax, payroll, cash flow, do it right, and you can focus on the good stuff: growing your brand, filling roles, and actually enjoying the ride.
Now get back out there and start building your empire properly this time.
