What are the Key Challenges in Tax Management for Recruiters?
Managing taxes of business accounts is also a tedious task. Especially for recruiters, who face several accounting challenges in their business domain. As the global and local recruitment needs change, recruiters are unable to comply with different tax policies and accounting standards. Today, tax management for recruiters has become more complex due to the growing risks in the global recruitment industry.
During the global pandemic, businesses in the recruitment industry were one of the first to feel the adverse impact of improper accounting and tax management complexities. Recruiting businesses are finding it difficult to protect their business value and secure their future against these risks.
Here are some of the main challenges in tax management for recruiters:
For recruiters, most challenges in tax management are not under their control. A primary example of such a challenge is the constantly changing demands in the recruitment industry. Today, recruiters have to manage their business accounts with greater accuracy and productivity. In order to meet these demands, they are compelled to adopt new business models. However, new business models come with their own set of accounting hurdles. Therefore, these changing demands affect the recruiters by impacting their methods of processing income streams and revenues.
To stay ahead of the competition, recruiters are exploring foreign placements and enabling their clients with international work opportunities. One of the key accounting challenges in the recruitment industry today is the uncertainty of international business policies. For example, the Brexit deal has had a major impact on the tax management system for recruiters.
When the United Kingdom leaves the European Union, recruiters operating in these regions would face several unknown tax implications. It would also lead to potential economic losses for EU workers as they begin accessing to UK’s independent market and separate tax policies. Political and regional imbalances as such would translate into more difficulties for recruitment businesses who are financially planning to expand their future in European countries and internationally.
Impact of IR35
The IR35 is an anti-avoidance tax regulation that implies similar tax to all strata of employment in the public sector. With the introduction of IR35, several recruiters are expected to face its impact in the private sector very soon. This places a major burden on the accounting functions of recruitment agencies. It also creates the need for hiring more specialized tax managers, which provide their services at an expensive rate.
Another significant challenge for accounting teams in recruitment agencies is the new levels of regulation and tax compliance standards. During the operations of payroll generation, recruiters are expected to face the brunt of legislative changes. These regulations are not easy to undertaking. They also place heavy responsibilities on the in-house accounting teams of recruitment businesses.
Best Tax Management for Recruiters
So, how do recruiters overcome these tax management challenges?
The best solution is outsourcing the entire accounting process to experts in tax management. Accutor provides dynamic tax management services for recruiters. It helps recruiters get a team of tax management experts that are more specialized than any in-house accounting team. Our tax management professionals can handle large volumes of accounting data by using the latest fintech applications and establishing a robust accounting infrastructure. Accutor tax management for recruiters also ensures flexibility and scalability, helping your recruitment agency to expand at your own pace.