Starting a LTD company whilst already working full time

[zed007]

Hey everyone, I'm new to this forum and hope you lovely people can help.

I'm working full time and earning around £50k per year, however I'm keen on starting a recruitment company. My wife is not working at the moment and although I want to setup a LTD company I'm not sure what the best approach is in saving money.

Can you please suggest the most efficient options please?

I would be the director and maybe my wife as well?
I would only be taking out dividends as I wouldn't get the 12k something personal tax allowance as that is used in my full time job.

If my wife is an employee she can get paid and if its under the personal tax allowance then she doesn't pay tax.

Are there any benefits in having my wife as a director? apart from she can take her salary with no tax and also dividends ?

Thanks everyone!!
Zed

 

[Scalloway]

An accountant would suggest the most efficient options and is an essential if you are planning to open a limited company.
But to answer some of your queries. The company can pay your wife a salary if she is doing work for it. She can only be paid dividends if she is a shareholder.

 

[MyAccountantOnline]

Hey everyone, I'm new to this forum and hope you lovely people can help.

I'm working full time and earning around £50k per year, however I'm keen on starting a recruitment company. My wife is not working at the moment and although I want to setup a LTD company I'm not sure what the best approach is in saving money.

Can you please suggest the most efficient options please?

I would be the director and maybe my wife as well?
I would only be taking out dividends as I wouldn't get the 12k something personal tax allowance as that is used in my full time job.

If my wife is an employee she can get paid and if its under the personal tax allowance then she doesn't pay tax.

Are there any benefits in having my wife as a director? apart from she can take her salary with no tax and also dividends ?

Thanks everyone!!
Zed

As a director you dont have to be paid a salary.

Your company could employ your wife if she is working for the company. If she were made a director without a contract she's not entitled to the National Minimum wage.

Bear in mind shareholders are paid dividends, you dont take a dividend as a director although may well be a director and shareholder.

 

[WaveJumper]

One thing I would check before you go any further, does your employment contract allow you to be a director in another company as this may put a completely different spin on things

 

[fisicx]

@zed007 - set up a limited company to do what?

Can’t you just start as a sole trader to test viability then switch to limited if it all works out.

 

[Scalloway]

You can still employ your wife to work in the business if you are a sole trader.

 

[fantheflames]

As others have mentioned, it's much easier to set up as a sole trader first and when your business grows, you can transfer to a limited company if needed.

 

[zed007]

That's some really helpful info. Thanks everyone. I did have a quick call with my accountant as I am employed and in the 40% tax bracket it may make sense for my wife to get setup as a sole trader and myself as an employee as she doesn't have another job so will work with me or in other words i'll be working for her.

I was looking into setting up a recruitment agency but still early days

 

[fisicx]

I was looking into setting up a recruitment agency but still early days

Nothing like starting something difficult!

 

[zed007]

Nothing like starting something difficult!

The good thing with this is that there's not much upfront cost and if I do start and unfortunately it doesn't work out then it won't be too bad I guess

 

[fisicx]

@IanSuth may have some thoughts on this. I don’t think it’s as cheap as you envisage.

 

[NickGrogan]

Starting a recruitment company can be cheap if you've got experience and contacts.

What do you know about the recruitment industry? Are you working as a recruiter at the moment?

 

[IanSuth]

That's some really helpful info. Thanks everyone. I did have a quick call with my accountant as I am employed and in the 40% tax bracket it may make sense for my wife to get setup as a sole trader and myself as an employee as she doesn't have another job so will work with me or in other words i'll be working for her.

I was looking into setting up a recruitment agency but still early days

Have you read the conduct of recruitment agencies and employment businesses regulations 2003 https://www.legislation.gov.uk/uksi/2003/3319/contents/made do you know what you can and can't do legally and what records you have to keep ?

What specialism are you planning on ?

Are you doing temp or perm ?

Where are you getting candidates from and have you thought of the cost (online cv databases like CVlibrary and totaljobs have monthly subscriptions with a 1 yr min contract) etc etc

 

[zed007]

Have you read the conduct of recruitment agencies and employment businesses regulations 2003 do you know what you can and can't do legally and what records you have to keep ?

What specialism are you planning on ?

Are you doing temp or perm ?

Where are you getting candidates from and have you thought of the cost (online cv databases like CVlibrary and totaljobs have monthly subscriptions with a 1 yr min contract) etc etc

I haven't read that document but thanks for the link I will have a read. I've been a software tester/senior QA/Automation tester for quite a few years so I was looking around software development and for now I would start with perm.
I've removed the link as for some reason I cannot reply adding a link

 

[zed007]

Starting a recruitment company can be cheap if you've got experience and contacts.

What do you know about the recruitment industry? Are you working as a recruiter at the moment?

Not working as a recruiter I've spoken to a few in the past, apart from that watched quite a few youtube videos. I've done a fair few interviews in my current job whenever we were recruiting

 

[IanSuth]

I haven't read that document but thanks for the link I will have a read. I've been a software tester/senior QA/Automation tester for quite a few years so I was looking around software development and for now I would start with perm.
I've removed the link as for some reason I cannot reply adding a link

It is not as easy as you think

I did IT recruitment in the Thames Valley from 93 to 2020 - it is not a licence to print money (maybe was in late 90's) - companies also have access to LinkedIn and Indeed so you can't just throw an ad out, hope for a bunch of cv's, pick out the best and send them on to the company hoping one will net you 20% of salary.

If you are not quicker than the next agency down the road (which could now be anywhere in the country/world) then that great cv will already be on the managers desk sent by someone else.

Your wife (if you are working) will have to be scouring the cv databases and watching for ad responses and jumping on them within minutes to qualify the applicant, ensure they have the skills, get their permission to submit them, get them in the right format and submit them. Many companies want submissions via their online portals which you only get a login to once you are on the psl - gone are the days of getting a good c# dev through the door and ringing up 10 local dev managers to ask when they want to arrange an interview.

Other than at the high end and for very specific niche roles i think the days of being a part time recruiter, interviewing in the evenings alongside a day job are long gone - you just won't be able to do things in a timely enough manner to not always be missing out.

 

[NickGrogan]

I agree with all the above. I did games recruitment in the late 1990s and early 2000s, and it was a licence to print money.

If you get a decent candidate to work with you exclusively, every single games developer wants them, PSL or not. 25% fees, nice salaries and people stay until the title is finished because published games means more money.

More recently my wife started a healthcare recruitment company - clients are super easy to sign up because they're all hiring constantly. Fees are closer to 10% rather than the 25% we used to get. Candidates are a nightmare, they don't turn up, they don't reply, they don't care because they know that another carehome will hire them. Wages are terrible, barely about minimum wage, so staff don't stay. If you go up the chain and start dealing with nurses, then the problem that Ian mentioned is a major issue - stop for coffee, and someone else will submit the CV before you.

 

[fisicx]

My wife works in niche profession.

Within minutes of a vacancy appearing anywhere the recruiters start sending out emails, texts, LinkedIn messages and any other means of communication.

Access to vacancies and a network of candidates appears to be key. The problem is all the other recruiters have the same access.

 

[zed007]

Wow that's a lot of fantastic advice and an eye opener for me really. I never thought it would be a walk in the park but you all are right all recruiters have the same access to candidates and vacancies.

I'll give it a long thought... maybe back to the drawing board

 

[IanSuth]

Both of what you have said above is what I was trying to get at

10% is more normal (def sub 15) and it is a speed game

In 1993 when i started - ring a company on a monday and get a role, either write down spec or if lucky get it faxed over. Go through register of candidates, if anyone looked right then if lucky leave a message on their answerphone or even ring at work but more likely take file home and be one of the calls that evening. Get any adjustments to cv made by secretary on tuesday and if not enough good people write and advert for local press deadline 4pm. Send any cv's you do have by fax tuesday pm. Thu eve local rag came out with ad in and if lucky odd cv friday but most over weekend arriving in Monday post. Ring decent ones Monday evening and interview. ALREADY A WEEK HAS PASSED

So having a ready database of known candidates a huge advantage and time not a real pressure

In 2020 - ring a company Monday and get a role, immediately get it emailed or be told "spec is on the website salary is x", search for known applicants and at same time try and search totaljobs, cvlibrary, monster etc etc. Immediate you have a decent person located pick phone up and email them to call you whilst it rings. Immediately ask if still looking and if they know xyz company are looking - if they don't already know and they are right check cv you have is most up to date - may have to email them the spec and await an updated tailored version done that night. Get the edited cv over to hiring manager and hope they don't say "oh i already have that one, know Fred" or like. If you can't find, write an advert but know the big agencies are using tools like broadbean which take a direct feed from their system and post to every job site immediately and you will be just one of many ads for the same role. ROLES CAN BE SHUT TO NEW CVS WITH A FEW HOURS


Now it is who can move fastest, have access to the right databases, search quickly, write an advert that gets to the top of the searches (means tailoring to each different site so it is above the write once post many bots)

Or have exclusive deals with companies which means time to build relationships - you will not get a sole agency deal as a young agency unless fROm a mate/ex colleague as you have no track record and few contacts

 

[fantheflames]

Starting a recruitment company can be cheap if you've got experience and contacts.

What do you know about the recruitment industry? Are you working as a recruiter at the moment?

Absolutely! There's always going to be some costs involved with starting a recruitment agency, but with contacts and networking groups in place, LinkedIn and other software/websites is all you need really.

 

[zed007]

Absolutely! There's always going to be some costs involved with starting a recruitment agency, but with contacts and networking groups in place, LinkedIn and other software/websites is all you need really.

If I did want to go ahead with this would I create a separate linkedin account or would i need to go premium? my current linkedin account currently shows a different job title etc

 

[fantheflames]

If I did want to go ahead with this would I create a separate linkedin account or would i need to go premium? my current linkedin account currently shows a different job title etc

Depends what your profile looks like. You need a personal page for Recruiter, so you'd want to make sure your profile looks like a recruiter page, not someone that works as a Compliance Officer for instance. It's also good practice to have a company page too.

 

[fisicx]

If I did want to go ahead with this would I create a separate linkedin account or would i need to go premium? my current linkedin account currently shows a different job title etc

You will def need to go premium. And pay for membership of every out source of leads you can find.

That being said, linkedin is a cesspool of recruiters. It's why I rarely visit - I get messages everyday for jobs that a clearly unsuitable.

 

[zed007]

You will def need to go premium. And pay for membership of every out source of leads you can find.

That being said, linkedin is a cesspool of recruiters. It's why I rarely visit - I get messages everyday for jobs that a clearly unsuitable.

I'm on linkedin quite often and have quite some connections and just keep up to date really with IT in general as that's what my current role is. Yep I do occasionally get messages for jobs that are completely unrelated to my current role, sometimes it shows recruiters not bothered to read potential candidate profiles

 

[zed007]

Depends what your profile looks like. You need a personal page for Recruiter, so you'd want to make sure your profile looks like a recruiter page, not someone that works as a Compliance Officer for instance. It's also good practice to have a company page too.

I don't have much on profile, just like a personal statement and work experience like a CV, so yes it would need updating

 

[fisicx]

Yep I do occasionally get messages for jobs that are completely unrelated to my current role, sometimes it shows recruiters not bothered to read potential candidate profiles

And that’s because it’s a numbers game. Throw out as many invites as possible and hope some of them stick. This is who you are up against.