Last Updated December 16, 2025
More than 75% of staffing agencies focus on temporary placement, and over 2.5 million temporary workers complete assignments each week. With growing demand for flexible workforce solutions, now is a great time to start a temporary staffing agency.
If you are wondering how to start a temporary staffing agency, understanding the essential steps is key. This guide covers 11 steps to help you launch a temporary staffing company, attract clients, and build a successful business.
Key Takeaways
- Starting a temporary staffing agency requires choosing a niche, understanding labor laws, and setting up a compliant business structure to serve clients effectively.
- Building a strong candidate pool and investing in staffing software helps place temps quickly and maintain client satisfaction.
- A clear pricing model, marketing plan, and active networking strategy are essential for attracting clients and growing your temporary staffing business.
- Managing cash flow with payroll funding and careful financial planning ensures you can pay workers on time and scale your temp staffing agency successfully.
How to Start a Temporary Staffing Agency
Starting a temporary staffing business comes with several considerations. Here are the most important steps to open your own agency:
1. Pick Your Staffing Niche
To run a successful staffing agency, you need a plan to make your agency stand out. There are thousands of temporary staffing agencies out there: what makes yours unique?
Choose a niche to narrow your focus. Consider specializing in staffing niches such as:
- Healthcare
- IT
- Administrative support
- Hospitality
- Seasonal retail
Defining which businesses or niches you’ll serve will not only shape your service model but also clarify how to conduct temp staffing effectively in your target market. Niching down also helps you stand out from the competition, since it tells employers you better understand their unique needs.
2. Learn Your State’s Labor and Staffing Laws
Before you officially start a temporary staffing company, it’s essential to understand the labor, licensing, and compliance rules that govern temp employment in your state. These regulations directly affect how you place workers, bill clients, and price your services.
There are laws regarding insurance and wage laws, not to mention industry-specific requirements. Because temp workers often move between multiple assignments, compliance becomes even more important in this space. When you know the rules around overtime, pay frequency, safety, and employer-of-record responsibilities, you’ll be much better equipped to start a temporary staffing services business.
A quick Google search will give you a general idea of your local requirements. However, when starting a business, it’s best to meet with an employment lawyer in your state. Their fee will be much cheaper than the cost of an audit or fines.
3. Set Up Your Business Structure
Decide on the legal structure for your business. Limited liability companies (LLCs) and S corporations are standard options for new staffing agencies. However, think carefully before filing any paperwork: your business structure will have a big impact on everything from liability protection to taxes.
If you plan to hire employees, consider forming an LLC. It’s a more complex structure than other options, but it shields your personal assets from liability. It also sets you up to act as an employer of record for temporary workers, which allows you to process wages, taxes, and insurance correctly.
4. Obtain Necessary Insurance
All businesses benefit from insurance, and temporary staffing is no different. Because you’ll be responsible for temporary employees placed on short-term or floating assignments, the risk profile is different from permanent placements. While every state has basic staffing agency insurance requirements, it’s also smart to consider coverage for all of the following:
- Workers’ compensation
- General liability
- Professional liability
- Umbrella policies
- Niche-specific coverage
5. Create a Temp Staffing Agency Business Plan
A business plan isn’t necessarily mandatory, but all of the best business owners have one. Creating a staffing agency business plan will help you visualize your company’s future to map a path to success. Plus, if you plan on requesting a loan or funding in the future, you’ll need a thorough business plan anyway.
A temporary staffing agency business plan should include:
- An executive summary
- Company overview, including your legal structure, goals, and ownership information
- A marketing plan, including a competitive analysis
- Service offerings and pricing
- How your recruiting pipeline will work
- Day-to-day operations
- Insurance and licensing information
- Plans for managing worker classification, wage rules, safety, and tax reporting
- Realistic financial projections
6. Build a Pricing Model for Your Temp Agency
Learning how to price temporary staffing services can be tricky, but it’s essential to success. At this stage, you should decide how to charge clients for placing temps, your markup rates, and how to cover overhead expenses while remaining competitive.
For general labor roles, agencies charge a markup of 25% to 60%. So, if a worker earns $15 an hour and you charge a 50% markup, the client would pay $22.50 an hour.
Agencies can bill hourly, with flat fees, or by percentage-based billing. Your niche and location also have a big effect on pricing. See what your competitors offer to understand what’s typical in your area. From there, you can choose a model that’s competitive but won’t drain your resources.
7. Invest in Temp Staffing Agency Software
Manual effort will slow down your ability to place candidates effectively. Invest in temp staffing agency software to automate as much of your business as possible while keeping your headcount low.
Unlike direct-hire recruiting, temp staffing requires fast placements, shift tracking, timekeeping tools, and streamlined communication between clients and workers. Investing in platforms designed for temp workflows simplifies everything from scheduling to compliance.
Assess temp staffing agency software to find the best fit for your organization. Ideally, look for a solution that offers free demos or trial periods so you can see the platform firsthand.
8. Create a Marketing Plan for Your Temp Agency
Now you need a marketing strategy for your staffing agency that attracts both candidates and clients. Your marketing plan should include:
- Target customer profiles
- Ideal candidate profiles
- Content and search engine optimization (SEO) strategies
- Social media strategies
- Email marketing promo ideas
- Direct mail or physical marketing plans
- Referral program details
By building a robust marketing plan early, you’ll see consistent leads, faster placements, and scalable growth.
9. Begin Networking to Find Clients Looking for Temporary Work
Marketing strategies like social media and email can help in the long run, but you need to network to find clients for your temp staffing agency.
You need relationships with businesses that need flexible labor, and personally connecting with decision-makers gives you a critical edge. Attend industry meet-ups and join staffing associations to tap directly into the market. In addition to finding clients, networking will also help you better understand everything from pricing to your competition.
10. Set Up Your Candidate Pool
When you start a temp staffing agency, success depends on how quickly and reliably you can fill short-term roles. That’s why you need a steady pipeline of workers who are pre-screened and ready to accept assignments at a moment’s notice.
Temp agencies need an even wider candidate pool than a traditional staffing agency. Since short-term roles only last a few weeks or months, you need a large pool for your clients to choose from.
At this stage, temp staffing software can make a big difference. The right solution will help you scale worker outreach and keep tabs on all of these relationships, building a reliable candidate pool for your clients.
11. Have a Plan to Stabilize Cash Flow
If you want to start a temporary staffing services business, you need cash flow to operate successfully. Cash flow can be challenging, though, because you must pay temp workers weekly or biweekly, which is long before clients pay their invoices. The gap in worker pay and client payments means you need a clear financial plan from the start.
Strategies like invoice factoring, tight payroll controls, and consistent billing cycles will help you cover wages, taxes, and insurance without disruptions. They also make it easier to price your services accurately.
How Payroll Funding Can Protect Your Temp Staffing Agency’s Cash Flow
When you’re building out your plan to start a temporary staffing agency, one of the biggest challenges is bridging the gap between paying your temps and waiting for clients to pay their invoices. This is where payroll funding comes in.
Payroll funding helps your pay employees on time and avoid stressful cash-flow crunches.
Also known as invoice factoring, payroll funding allows you to convert unpaid client invoices into immediate cash. Instead of waiting weeks for a client to pay, you can sell their invoice to a third-party payroll funding company like altLINE, who advances up to 90% of the invoice’s total value within 24 hours. The payroll company collects payment from the customer and charges a nominal fee before paying the remaining amount of the invoice.
With this option, you can continue to operate confidently without worrying about paying temps late. Payroll funding is an extremely common form of financing for staffing agency owners, as it allows companies to scale faster, take on larger clients, and meet payroll obligations without fear of delays.
In-Summary: Starting a Temp Staffing Agency
Launching a temporary staffing business comes with a lot of moving parts, but each step brings you closer to building a flexible, in-demand service that clients can rely on. Temp staffing services are beneficial for both employers and candidates, so you’re filling a legitimate need by starting your own company if you do ultimately choose to pursue this venture.
Know your niche, design a compliant business, build a strong talent pool, and create a competitive pricing model to get ahead. With smart cash-flow planning, the right software, and a thoughtful marketing and networking strategy, you’ll be well-positioned to start a temp staffing agency that’s profitable, resilient, and ready to scale.
Michael McCareins is the Content Marketing Associate at altLINE, where he is dedicated to creating and managing optimal content for readers. Following a brief career in media relations, Michael has discovered a passion for content marketing through developing unique, informative content to help audiences better understand ideas and topics such as invoice factoring and A/R financing.
