10 Steps to Starting a Recruitment Agency

Each year, thousands of recruiters will be sitting at their desk of the agency they work for and think of the day when they may be able to start their own recruitment agency.  It may be that they have a desire to build a business for themselves, or they’re disillusioned with their current agency and remuneration – or they may just see an opportunity within their market and decide that it’s the right time.  Whatever the motivation, once this thought comes into a recruiter’s mind, the next part is making that a reality; this takes time and planning, but is certainly achievable.

Below is a list of the things that every new recruitment agency needs to get in place before they can start trading, no matter the industry or placement focus:-

  1. Decide on a Company Name
    First impressions are important and your company name is going to make a statement to your clients and candidates about what your agency does and perhaps the industry you are going to recruit into. It may be one of the hardest things for you to decide on when starting your agency but is worth spending some time on as rebranding later down the line can often be costly and cumbersome.
  2. Register at Companies House
    Once you have decided on the company name, it is time to register the company with Companies House. You can do this yourself or pay for a company to set this up for you.  Our recommendation is to ensure the shares are set up correctly from the start and if there is only one shareholder then try and start with at least 100 shares.
  3. Domain Name Registration
    Your company domain name is very important as most of the communication with your clients and candidates will be via email. Having a quick and easy domain name will make it easy for people to remember your website and also to spell over the phone.
  4. Bank Account Setup
    Choosing the right bank at the early stages is important and should be based on the online banking system not the charges imposed. Most bank charges for new start-up companies will be fairly standard across the board so it is important that the ability to send, view and receive payments using their online system is simple and easy to use.
  5. Insurances Required
    The only legal requirement to have insurance for a small business is Employers Liability cover when they employ staff. However, it is advisable to take out a combined insurance policy with Public Liability insurance at the same time.  Some clients may also require you to have additional insurances, such as Professional Indemnity insurance, but only get this when it is required to keep costs low.
  6. Legal Contracts
    Having a robust set of Permanent Terms and Conditions, Client and Candidate Contract Agreements and Internal Staff contracts is important to protect your agency from any legal claims and to ensure that your clients will make payment against the invoices you raise. Acquiring contracts from your previous recruitment employer is definitely not recommended. Professional bodies such as the REC have contract template services or you can obtain these from an employment lawyer.
  7. Telephone and Internet
    The most important tool for a recruiter is their phone so getting a memorable telephone number and not having a mobile as the main number are important. There are possibilities of having landline numbers that divert to mobiles to appear to your clients and candidates that they are calling an office instead.
  8. Data Protection Certificate
    As GDPR is an important part of business legislation nowadays and because your agency will be dealing with candidates’ personal data, it is important to register your company with the ICO to get a Data Protection Certificate. The cost for the certificate is minimal  for each year and you can register your agency at http://ico.org.uk/for_organisations/data_protection/registration
  9. HMRC Registrations
    When your company is registered at Companies House, your agency will automatically be registered for Corporation Tax with HMRC and you will be sent your company UTR number. However, you may also need to register for VAT, PAYE (and CIS if you are working within the Construction Sector) along with ensuring you are registered to submit your Intermediary reporting each quarter.
  10. Back Office and Accounting Support
    Engaging an Accountant or Back Office Company may seem like something that isn’t important from the beginning of your new business but setting this up later could be a costly exercise. By engaging a provider early on, this will ensure your company is set up correctly, your books and records are up to date, you are receiving financial reporting and you are remaining compliant with HMRC.  If this is done at a later date you may end up with a large bill to get your books up to date and fines if your HMRC responsibilities are not met.

TBOS has many years’ experience of setting up agencies for new directors and has helped set up over 150 recruitment businesses in the last 9 years.  We work with the agency directors to give advice on how they should be structuring their business, help with the formation and registration of the company and provide reputable contacts of suppliers who can help with contracts, insurance and other services.  TBOS also provides the on-going help and support to the agency directors so they can concentrate on making those all-important early placements, while the back office and accounting processes are taken care of.

For more information on how TBOS can help set up your new recruitment agency, please contact our office.