Running a recruitment agency means juggling clients, candidates, placements, and payroll, all at once. With so many moving parts, bookkeeping often gets pushed aside until it becomes too messy to ignore. Yet in this industry, where commissions, contractor payments, and complex payrolls overlap, even one small mistake can ripple into big financial or compliance issues. Knowing which errors to avoid can help keep your books balanced and your agency steady.
1. Misclassifying Contractors and Employees
This one catches many agencies off guard. The line between contractors and employees can blur, especially when contractors work regular hours or stay with a client long-term. But the Australian Taxation Office is strict about classification, and getting it wrong can lead to unpaid super, back taxes, and penalties.
Your bookkeeping system should clearly separate employee wages, which include PAYG and super, from payments made to independent contractors. Review your agreements regularly, record every arrangement carefully, and keep digital copies of contracts. Clean, well-labelled records mean fewer headaches if the ATO ever comes knocking.
2. Falling Behind on Invoicing and Receivables
When the focus is on filling roles, invoicing can easily fall to the bottom of the list. But every delayed invoice creates a gap in your cash flow and makes it harder to cover wages or supplier payments. Missed or late invoices also muddy your reporting and make chasing overdue accounts harder than it should be.
Automated invoicing helps remove that friction. Set up reminders and link billing cycles to placement milestones so invoices go out the moment the job is done. Consistency keeps money moving and gives you a clearer view of where your cash stands week to week.
3. Neglecting Payroll Accuracy
Recruitment payrolls can be complicated, staff, contractors, casuals, commissions, bonuses, different rates, different schedules. With so many variables, even a small error can create confusion or distrust. Missed hours or miscalculated super don’t just cost money; they hurt credibility.
Integrating your payroll and bookkeeping systems removes most of that risk. Automation takes care of PAYG, super, and deductions, while reconciliations ensure that what leaves the bank matches what’s recorded. Regular checks keep everything aligned. Accuracy here isn’t just about compliance, it’s about running a business that people trust.
4. Overlooking GST on Contractor Invoices
Another common trap is forgetting to verify a contractor’s GST registration. Some contractors are registered, others aren’t, and treating them all the same leads to errors in your BAS. An incorrect GST claim can throw off your books and attract unwanted attention from the ATO.
Before making any payment, confirm each contractor’s GST status. Check the ABN Lookup and make sure your bookkeeping system reflects it correctly. Every invoice should show the right ABN and GST details. A few extra minutes now can prevent messy corrections later.
5. Trying to Manage Everything In-House
It’s natural to want control, especially early on. Many agency owners try to do their own bookkeeping to save costs, but as transactions multiply, so does the room for error. What starts as a weekly chore can quickly turn into a source of stress and late nights.
Working with a professional bookkeeper who understands the recruitment industry changes that. They’ll handle compliance, payroll, and reporting, while giving you insights you can actually use. A good bookkeeper doesn’t just record numbers; they make them meaningful, showing you how your business is really performing.
Keeping Recruitment Finances on Track
Bookkeeping for recruitment isn’t simple. Between client contracts, placement fees, and payroll cycles, there’s little margin for error. The key is to build strong systems early, automate what you can, and keep clear communication between your payroll, admin, and accounting teams.
Regular reconciliations, compliance checks, and accurate reporting keep you in control. When your books are in order, you can focus on growing your agency; connecting people with jobs, building relationships, and knowing your finances are just as reliable as your placements.
Stop letting bookkeeping mistakes slow your agency down. Find out how Tall Books can help simplify your systems and keep you compliant.