What You Need to Open a Staffing Agency

By Adam Day

November 9, 2021

The “Great Resignation” is upon us, and while some workers are hopping from one position to another in search of better work conditions, others are finding that now is an opportune time to start your own business. If you consider yourself an ambitious entrepreneur, now might be a better time than ever to start a staffing agency.

1. Create a business plan

An essential first step to starting any business is crafting a detailed business plan. Almost every failed business venture is a result of not having a well-thought-out plan. Crafting your business plan will also illuminate some of the hurdles you may face while starting your business and give you an opportunity to plan how you will tackle those challenges. 

Start by laying out your business goals and how you will go about achieving them. It should detail all the main points on how your business will be structured, financed, marketed, and run. This is also a great time to check what government requirements are in place to start a staffing agency, as they may vary depending on what state you’re starting your agency in. Your business plan needs to be clear enough that an external audience can easily understand its main points.

Getting this right from the beginning will make the rest of the steps in this checklist much easier.  

As you move forward with the planning phase of your venture, you will revisit and revise your business plan to ensure it stays up to date. 

2. Get your company name trademarked

Decide on a good name for your business. It should be easy to remember and help you stand out from the competition. Once you’ve checked that the name is not already in use by another company, get it trademarked and registered with your local authorities. Now is also a good time to purchase a domain name for your website. There’s no need to design a full website just yet, but it can be worthwhile to design a simple “Coming Soon” landing page through a free website builder. 

3.Secure funding

Startup costs for a staffing agency can range from $60,000 to $130,000, but can vary depending on your location and size of your business. And finding that funding is one of the most crucial steps to starting a business and there are many ways of doing so. You could seek a small business loan or grant, find private investors, or pool your personal savings with those of your co-founders. For those seeking a loan or private investment, you’ll need your business plan and a pitch deck—essentially, a series of PowerPoint slides—outlining your financial projections, opportunities, and growth strategies. You’ll also need a Corporate Director Agreement if any investors are becoming board members. 

4. Apply for an Employee Identification Number (EIN)

One of the government requirements for starting a staffing agency – or any U.S.-based businesses – is to apply for an Employee Identification Number or EIN. An EIN is required for tax purposes. You can do this free online through the IRS website and it shouldn’t take more than 15-minutes. To apply, you must have a valid Taxpayer Identification Number (SSN, ITIN, EIN) and be the principal owner of the business entity. 

5. Open a business bank account and apply for a license

Once you have your EIN number, you’ll want to use it to open a business bank account. You will also need your business formation documents, ownership agreements, and business licenses. Depending on your state, you may need to apply for several different types of licenses and permits to get your staffing agency up and running, but you can plan on at least a federal, state, and local license to operate your business legally. Seek a consultation from a local business attorney to ensure you don’t miss anything. 

6. Get insured

Getting the right insurance is a step no business can afford to overlook. Your chosen policies should cover just about every possible eventuality you could run into. For instance, staffing agencies will certainly need general liability insurance, professional liability insurance, and worker’s compensation insurance. This is something a business attorney can also help you with. 

7. Determine your tax classification and payment structure

To stay in good legal standing, your business will need to meet its federal, state, and local tax obligations. These will vary based on both your location and business structure. Be sure to check with the IRS to see which taxes apply to you. The general types of business taxes include income tax, self-employment tax, estimated tax, employers’ tax, and excise tax. 

8. Design a marketing plan and create your company website

You should already have a basic sense of how you will market your staffing agency from having written out your business plan. Now it’s time to expand on that and get into the finer details. A good marketing plan should outline:

  • Your agency’s current market position
  • How to get contracts for your recruitment agency
  • An overview of your goals and strategy for reaching them
  • The key performance indicators (KPI) that you’ll be using to measure your progress
  • A description of your target market and how you intend to reach them
  • A list of your competitors
  • An executive summary that condenses your marketing plan into an easy-to-read format

You will also want to create your company website during this step. Devote some time and a section of your marketing budget towards designing the best company website possible. Aim for clarity and accessibility. A casual visitor should know within seconds what type of business you are, where you are located, and what sets you apart from the competition. Hiring a professional web designer for this step can be a worthwhile expense that will more than pay for itself in the long run. However, there are some DIY website services that make it easy for you to design your own website without design experience.

9. Get the right tools

A modern business requires modern tools and technology to run efficiently. For a staffing agency, this step would mean looking into time and attendance tracking software, candidate tracking software, and a payroll system. Having the reliable tools for these processes will ensure that your agency runs smoothly. Be sure to consider these investments in your budgeting and business plan, as this is not a step you can afford to miss. You should consider anything that allows you to automate time-consuming processes as this will free you up for more important business-development activities. 

10. Begin sourcing and interviewing candidates

You’re in the business of providing temporary employees, so start lining up a pool of candidates that can be parceled out to your clients. By using some of the recruitment tools you’ve already picked out, you can make this step a breeze. Establish a clear system for sourcing, vetting, interviewing, and placing those candidates that you’ve chosen. 

11. Launch your business

With all the preliminary steps now completed, it’s time to launch your staffing agency. If you’ve done everything right so far you should have everything you need to start acquiring staffing contracts, placing your employees, and reaching for your business goals. Expect a few growing pains in the first few weeks and months, which will have to be ironed out over time. This is normal for any new business. Ensure that you’re allocating enough income to cover tax payments and updating your tools, and continue revising your business plan as needed. 

Final thoughts

Now you’re ready to hit the ground running. In just 11 steps, you should have all your bases covered to set your staffing agency up for success. Every staffing agency will have its own approach to how they run things and what they prioritize. Revisit your business plan often to make sure you are still on track to reach your initial goals, and to make sure that you are up-to-date on all government and tax regulations.



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