In 2019, 7711 recruitment businesses were formed at Companies House, with many experienced recruiters looking to start their first recruitment agency. These experienced recruiters can find clients and candidates and turn these into placements, but they do not know how or what is required to start a new company.
Below is a checklist to get started:-
FORMULATE A BUSINESS PLAN
The first thing to do is to decide on what type of agency you are going to build – Permanent/Contract/Temporary? Which industry? Local/National/International? You may also need to consider any restrictive covenants from your previous employers and how that may affect your initial few months.
THINK OF A COMPANY NAME
This is one of the hardest parts of forming your own company as you often want something that is unique and personal to you. You may want to consider using words like “Recruitment”, “Resourcing” or “Staffing” to show what you do. You may also want to keep it very simple and easy to remember. You should also check Companies House to ensure there are no similar company names and to ensure that the domain name you want is available.
REGISTER THE COMPANY AT COMPANIES HOUSE
You can register your company in a number of ways at Companies House. You can do this yourself by going to the Companies House website, filling in the application and paying your £12 fee, or you can use a formation company who will do this for you. Once registered, you will get a Certificate of Incorporation and your company formation documents.
BUY THE COMPANY DOMAIN
Buying the right domain name is important as it will form how people find your website and will be included in your email address. Make sure your domain name is short, memorable and easy to take down should you need to give it over the phone. We would also recommend you buy the ‘.co.uk’ and ‘.com’ domain names so you can then decide on which one to use.
SOURCE A BUSINESS BANK ACCOUNT
There are lots of banks that you can choose from to have your business bank account with, all providing offers to new business owners. Before you sign up to a bank ensure you have had a demonstration of the online banking portal and check how long it takes to get the account setup along with your access. If you are making international placements ensure they can provide currency accounts and allow you to make these payments online.
REGISTER FOR VAT AND PAYE WITH HMRC
When you form your new business at Companies House, you will automatically become registered for Corporation Tax and receive your UTR number (this is important and needs to be given to your accountant). You will also need to check if you need to be registered for VAT and PAYE. VAT registration allows you to reclaim any VAT on your start-up expenses and charge VAT to your clients. PAYE registration allows you to process salary payments for yourself and any future staff you decide to take on. These registrations can be completed by you or your accountant.
ARRANGE COMPANY INSURANCE
Company insurance is a requirement for any business, and recruitment agencies require Public Liability and Employers Liability as standard. Depending on the industry and clients you are dealing with, you may require Professional Indemnity Insurance. It is best to use a broker who can source you the best price for the insurance levels you require.
IMPLEMENT SOME BASIC MARKETING
For your new company to be found and noticed you will need to implement some basic marketing. This will include getting a company logo designed, creating a holding page for your website and building a social media presence (LinkedIn Company Page, Twitter Account, Instagram, Facebook etc).
SOURCE ROBUST CONTRACT TEMPLATES
Contract templates are vital to ensure your business is protected when making a placement. You should ensure that you purchase new and up to date contract templates which cover all the current legislation such as AWR, IR35, GDPR and the Code of Conduct Regulations.
FIND A GOOD BACK OFFICE AND ACCOUNTS PROVIDER
As a new recruitment director, you want to ensure you are maximising your time spent on making new placements and growing your business, so it is advisable to find a reputable accountant. A great accountant will be able to give you specific advice regarding the recruitment industry, provide good management reporting and ensure you are maximising any tax allowances. You may also want to consider additional outsourced back-office support such as timesheet management, invoicing, credit control and bookkeeping.
ARRANGE INVOICE FINANCE (IF PLACING TEMP/CONTRACT POSITIONS)
If your new recruitment business is placing contractors or temporary placements, you may also need to look at how these placements will be administered and funded. There are a number of options open to agencies such as using a Pay-And-Bill company or setting up an invoice finance facility with a bank/invoice finance company. These facilities will provide the funding to pay your candidates before the client makes payment.
START CALLING CLIENTS AND REGISTERING CANDIDATES
Once the company is registered, there is no reason why you should not start hitting the phones to engage with clients and candidates in the hope that you can make that first placement. Often agencies get bogged down with getting a full website in place or waiting for a company bank account before they actually start making those all-important calls to clients.
Whilst this list does provide the basics for a new recruitment business, there are other things to consider, such as CRM’s, job boards, compliance and office space. Once the agency is formed and ready to go there should be no reason why the agency should not be able to make placements and grow into a successful business.
TBOS has helped over 200+ new recruitment directors form their first recruitment agency by providing help, advice and support to ensure they start their journey compliantly and as quickly as possible. Please contact our office if you would like further information on how we can help your agency.