regulations and compliance

Last Updated on September 27, 2021

Documentation is one the most important and involved parts of starting any new staffing business. First, you will need to register and incorporate your staffing agency. Then, you’ll want to apply for insurance coverage. You will be signing up clients and employees.

You will need to provide certain documents to appropriate state and federal agencies and keep copies for yourself. Outside of this, you will need the forms for your records. Below are some of the essential legal and business documents you need to operate a staffing agency legally.

Federal Documents

First, you’ll need to get together your federal documents. Here are some of the most important to keep in mind.

EIN (Employer Identification Number)

The EIN is the federal government’s designation of your staffing agency’s ability to hire employees. Obtaining one of these 9-digit numbers is simple. Go to the IRS website and fill out the online form. It takes only a few moments for your number to be issued.

IRS Form 941 (Employer’s Quarterly Federal Tax Return)

As its name implies, submit Form 941 with the correct payment to the Internal Revenue Service four times each year. The due dates are April 15, July 15, October 15, and January 15. You may need legal or financial help with this form.

Form W-4 (Employee Withholding Certificate)

New employees fill this form out upon hire to determine how much tax will be withheld each pay period and sent to the IRS. You will need a stack of these forms. Employees can fill them out and change their tax withholding at any time.

Form I-9 (Employee Eligibility Verification)

This form comes from the U.S. Citizenship and Immigration Services department. Employees fill this out upon hire to prove they are legally qualified to work in the U.S. You will need to confirm their eligibility by including a copy of their Social Security card, passport, driver’s license, or alien authorization number.

State Documents

Outside of Federal documents, there are a couple of essential state documents to file.

Articles of Incorporation

Articles of Incorporation are the legal documents filed with the Secretary of State’s Office in your state that allow you to form a corporation in that state.

These documents are essential if you decide to begin your staffing agency as a Limited Liability Company (LLC) or corporation. This step is usually unnecessary if you choose to run the business as a sole proprietorship.

State Tax ID number

Similar to the EIN, each state expects you to have a personalized employer tax identification number based on your location so they can collect state payroll taxes.

City/County Documents

Check with your city and county laws to see if there are any specific requirements for business owners in your area other than what is listed here.

Business License and Certification

This piece of paper authorizes you to conduct business within the local jurisdiction (city or county) of your business’s residence. You renew this license each year.

Your first application will ask you to estimate how much gain in sales you expect in the start-up year. Your business tax will be based on that amount. After that, state the exact amount of money you made in sales to determine your local business tax.

Personal Business Documents

You will need some personal business documents for your staffing agency. Here are just a few that can help you get started.

Business Plan

Any company should have a detailed business plan. This is the document that sets up how you intend to run your staffing agency. Additionally, you will need one to solicit loans or other types of outside financing.

A strong business plan includes all of the following sections:

  • An executive summary that introduces your staffing agency and briefly summarizes all other areas of the plan.
  • A company description that includes your mission statement and what your company plans to accomplish.
  • A product and Services section that briefly explains your unique staffing agency’s niche. This explanation includes answering how you will differ from previously established businesses in your area and how you plan to handle new assignments/clients and disappointed customers.
  • A marketing plan that tells how you expect to find customers. Will you buy social media or search engine ads or rely on word of mouth? Will you attend any trade shows and pay for a booth? In this section, tell what others in your area are doing and if you think it’s successful. Will you copy them or go a different direction? You should include a budget for anticipated marketing expenses.
  • An operational plan that details in simple terms how you see yourself running the operation. How will you achieve your goals? How will you organize your staffing lists? Will you work from home or rent office space? What types of contracts will you provide your employees, and what types will you get from your customers? What is your fee structure?
  • A financial plan that details your projected expenses and income for three years. You expect the business to grow during that time, right? Show how that will occur in weekly, monthly, and yearly increments.

Non–Disclosure Agreement (NDA)

This legally prevents your colleagues and employees from disclosing valuable business-related information to outsiders.

These contracts bind the signers from revealing sensitive information, such as customer data, pay rates, business strategies, patented technology, etc. Decide who you will expect to keep quiet about the way you run your staffing agency.

You might even include job applicants during the interview process.

Employment Agreement

An employment agreement creates the relationship between an employer and an employee. When you decide to hire someone, this will spell out all the rights and responsibilities of both your staffing agency and the new employee.

You might want to include work hours, hourly wage, timecard due dates, and what types of behaviors may lead to disciplinary actions.

Business Insurance

There are many ways your staffing agency can fail if you don’t purchase insurance, and you must pay out-of-pocket expenses for liabilities.

For example, if an employee sues you after getting into an accident on the way to or home from a job site. Or if there’s a fire in the building that gutted your office. Any potential calamity could cripple or wipe out your staffing agency. Be prepared.

Consulting Contracts

Before you send your employees to any job site, make sure these agreements are in place. These outline all the services your staffing agency and employees will provide to the companies with whom you will be working.

They also detail how much the outside company will pay you for your services.

Job Application Template

If you are running a staffing agency, then you’ll need staffing. Invest in a job application form that will provide you with the information you’ll need to make the right hiring calls.

There are loads of free templates on the internet that include all the pertinent information, such as name, contact info, education, experience, and references.

Many of the templates are adaptable.  Add a personalized question or two to obtain the answers you need to make informed decisions.

Invoice Template

Now that you’ve done the hard work to get your staffing agency up and running, you want to get paid by your customers.

You will need to send them invoices with your company name and address, an invoice number, invoice date, and payment due date. You will also want to list a description of the services you provided, a unit cost, and the total amount for that account. You may also include some notes.

The most important parts are the amount they owe you and the date you expect payment.

If your staffing company experiences issues with cash flow and delayed customer payment, check out our information on payroll funding, a unique working capital solution tailored specifically to the staffing industry.

Other State or Industry-Specific Licenses

Each state has offices of finance and consumer affairs. They will have further detailed information concerning the types of paperwork required to effectively start a small business, including your new staffing agency.

Check out your state’s website for more information on these requirements and how you can address them, and good luck with your staffing agency venture!