Your Ultimate Checklist for Starting a Staffing Agency

Last Updated March 21, 2024

A good first step in starting a staffing agency is creating a checklist of what you’ll need prior to launching your company. This organization document will guide you along the exciting process of opening your firm, ensuring you don’t mistakenly forget any necessary requirements.

You can use this staffing agency checklist as a framework for that document. By reading this article, you’ll know exactly what is required to open your staffing agency.

Checklist for Starting a Staffing Agency: Here’s What You Need

Proper business planning is crucial to the long-term success of any business. Below are eight essential actions to take before you can start making money.

1. Have Adequate Funds

You can’t launch a business without knowing where your money is going to come from when it’s time to expand operations.

The average cost to start a staffing agency is between $147,000 and $222,000. This includes office equipment, software, employee training, office space, and working capital for the first six to nine months of operations.

If you don’t have near this amount, you’ll need to wait until you accrue enough cash to not just get your staffing agency off the ground but to afford future growth. If you don’t have ample cash on hand, it’s time to look into financing options for your staffing agency.

2. Secure Additional Financing (if Necessary)

One of the biggest reasons why being overprepared in terms of funding is so important in the staffing industry in particular is the payroll aspect. At some point, you might have dozens to even hundreds of employees relying on your business to pay them on time. Because of this, making payroll on time should be one of your top goals as a staffing agency. Being unable to afford to do so even just once can be a detriment to your business, leading to disgruntled employees and clients, and to a loss of trust.

To prevent this, look into financing options for staffing agencies. Traditional bank financing can be hard to find, leading many employment agency owners to turn to payroll funding, otherwise known as invoice factoring for staffing companies.

3. Draft A Business Plan

Every staffing agency needs a business plan. It will act as the blueprint for your company and a resource to rely on throughout your company’s entire lifecycle.

Many details you’ll need in your business plan will be similar to your staffing agency checklist, including how you’re going to secure financing (if needed); what your marketing and operational plans are going to look like; which licenses, permits, and insurance you’ll need to obtain; and how your business is going to be structured. You can use the business plan and this checklist for starting a staffing agency hand-in-hand to ensure you’re covering all the necessities for building your company.

4. Register Your Business

A simple, but important, checklist item is deciding your business structure and properly registering your business. The most common business structures that owners choose include:

• LLC: Owned by one or more people, offers limited liability protection
• Sole Proprietorship: Owned by one person with no distinction between the business and the owner, no liability protection (owners liable for any potential business debt)
• Partnership: Owned by two or more individuals, no liability protection (owners liable for any potential business debt)
• Corporation: Owned by shareholders, offers limited liability protection

Aspects such as your location and structure will determine how exactly you need to register your business, but you can do so through the Small Business Administration’s business registration website.

5. Meet All Government Requirements

There are several government documents you’re required to complete before opening an employment firm.

These include:

• Employer Identification Number: If you have employees, you’ll need to fill this out on the IRS website.
• IRS Form 941: This is an employer’s quarterly federal tax return form, which you can also access on the IRS website.
• Form W-4: This employee withholding form will be used to signal the amount of tax money withheld each pay period.
• Form I-9: This employee eligibility form proves employees are legally eligible to work in the U.S.
• Articles of Incorporation: Filed to your Secretary of State Office, this form allows you to form a corporation in your state.
• State Tax ID Number: This assists your state with identifying your business when it comes time to collect payroll taxes.
• Business License and Certification: This gives your employment agency permission to conduct business in your city and county.
• City/County Documents: Reach out to local officials to ensure no other documents are required for new businesses in your area.

6. Obtain Staffing Agency Insurance

The importance of obtaining the necessary insurance can’t be overlooked by staffing agencies. With so many employees working under your name, you need ample protection, as your staffing agency could at some point be at risk of legal disputes.

Staffing agency insurance requirements include:

• Workers’ compensation
• General liability insurance
• Professional liability insurance
• Commercial property insurance
• Employment practices liability insurance
• Cyber insurance
• Auto insurance (if you have a registered company vehicle)

You can save money by bundling some of these coverages. For instance, business owner’s policy insurance bundles general liability and commercial property insurance.

7. Open a Business Bank Account

As your business expands, it’s wise to have a bank account dedicated strictly to business operations for organization purposes. You don’t want to risk accidentally getting your personal funds caught up with your business funds.

If you decide to structure your business as an LLC or corporation, you’ll actually be required to open a business bank account. You can open a business bank account through the Small Business Administration.

8. Write a Non-Disclosure Agreement (NDA)

You’ve probably heard of an NDA, and you’ll become even more familiar with these agreements once you launch your staffing agency.

You’ll need an NDA contract for your employees, co-workers, or business partners to sign off on before they get working. This document prevents people within your company from disclosing confidential information, such as your client information and their pay rates, with people outside of the company.

Wrap-Up:

This checklist for starting a staffing agency should assist you with preparing for what’s to come once your business is off and running. There’s no such thing as being overprepared when you’re running an employment agency. Carefully ticking off these boxes can give your business a headstart on the path toward success.