How To Start A Recruitment Agency

Introduction on how to start a recruitment agency

Starting a recruitment agency from scratch is challenging. Most successful recruitment companies are started either by someone with many industry know-how and contacts or by recruitment professionals with experience working for other agencies. If you’re starting on your own, make sure your existing recruitment employer doesn’t have any contractual obligations about not working with their existing clients.

A legal recruitment agency doesn’t only allow them to assist people trying to find jobs and employment opportunities. An employment office business also allows entrepreneurs to earn considerable profits for matching employers and employees. If you’re trying to find an ideal business that you simply can engage in, you would possibly want to think about investing in a job recruitment agency.

A step by step guide on how to start a recruitment agency

As more companies start their operations in India and more youngsters aspire for better employment prospects starting a recruitment agency in India is bright and growing. Running a successful business is not a piece of cake; it involves so many things and you have to consider so many factors. Do step by step to manage the work. It involves a few steps given below:

How to start a recruitment agency.
how to start a recruitment agency.

Step 1: Determine your niche

To start with, you would like to determine which sort of recruitment agency you’re. With numerous recruiters out there, confirm potential clients and candidates understand what makes you unique. It is often an honest idea to specialize in a key industry or industries. You’ll be an IT-focused agency or a retail business-oriented staffing team. Just examine the network you’ve and therefore the knowledge you shine at, and choose a market to supply your service.

If you take the time to learn their area of business inside and out, there’s a higher chance they’ll put their faith in your knowledge and ability to find them suitable candidates – or roles. Also, consider which candidates you have the strongest connection with. Are they fresh graduates or are they seniors? Asking yourself these questions will help you better position your business.

Step 2: Know what recruitment agency is

You must know what the recruitment agency is before you opt to start one. A recruitment agency generally works as a mediator between the corporate and candidates.

Agency chooses candidates consistent with the corporate requirement, interview, and placement. Decide beforehand during which field you would like to figure like medical, engineering, etc.

Step 3: Check you have the right skills

Starting a recruitment agency with no experience will make launching your business tougher – but not impossible – especially if you’ve got these key skills and qualities:

  • Communication and people skills
  • Sales and negotiation skills
  • Organization and prioritization skills
  • Problem-solving skills
  • Tenacity
  • Confidence and motivation
  • Time management
  • Team working skills

Step 4: Capital requirement

You need money to make extra money. Any business you start needs money no matter what you are doing or where you are doing. To start a recruitment agency you’ve got to understand what proportion of money it requires. It’s important to possess capital once you plan your business.

Capital helps in making it possible what was in the blueprint. Actual work starts once you start in-flow of capital and you would like to plan it. Once you plan your capital keep in mind that once you borrow capital you’ve to pay it back. So borrow it from trusted resources.

Step 5: Choose a name for your recruitment agency

Choose a name that follows LLC rules of your state or region. Afterward, file out the formal paperwork – typically referred to as articles of organization and pay the filing fee to the state or regional agency that handles business filings.

Create an LLC operating agreement to determine who manages the LLC and how to deal with profits. This is not required, but recommended.

Seemingly an easy task, arising with a reputation for your recruitment agency can prove trickier than expected.

Before you deliberate over the right name, here are some branding pointers and a couple of legal parameters that you simply need to adhere to:

  • Keep it legal
  • Check availability
  • Make it simple

Step 6.1: Register your recruiting agency

The very initial step is getting your company registered. Registering your recruiting company aids in gaining benefits in matters of loans, transfer of shares additionally limiting the liability on each shareholder. You must thus register your firm as either Partnership, Proprietorship, Limited Liability Partnership, Private Company, or a One-person Company. Knowing well, what’s your requirement, you’ll register as either following the method required for each. It is best to have limited liability protection for the promoters, since recruitment agency involves employing many employees and compliance with stringent labor laws and ESI or PF Regulations. Further, LLP and Private Limited Company also improve simple transferability, ensuring continuity of business even just in case the promoters wish to exit the business.

Step 6.2: Register under GST and various Government schemes

The next step after registering the company is getting the necessary registrations done. This includes GST registration and registering under MSME, and much more. Unlike before no service tax registration is required, it is replaced by GST, i.e. Goods and Service Tax.

If yours may be a small, medium, or micro-industry registering under MSME will aid in gaining easy bank loans, easy repayment, tax benefits, and exemption in certain taxes.

Step 6.3: Registering with the Ministry of Overseas Indian Affairs

Required if your business is helping Indian individuals for overseas employment.Along with supporting documents, the application of becoming a recruiting agent must be submitted to the concerned office of the Ministry of Overseas Indian Affairs in the prescribed format. Specifically, the agents which have been registered with the above can recruit Indian Citizens for employment abroad as per the Emigration Act, 1983. The application for registration is accompanied by a fee of Rs. 25,000 and a guarantee deposit worth Rs. 50 lakhs in a bank. The requirement for getting the Recruiting Agent license is as under:

  • For becoming a Recruiting Agent, apply in the prescribed format
  • Demand draft for a fee of Rs.25,000/-
  • Passport size photos of the promoters
  • Details of the promoters including business activity in the last five years
  • Certified specimen signature of the promoters
  • Asset and liability statement of the promoters
  • Income tax returns of the promoters
  • Degree certificate of the promoters
  • Bank guarantee for an amount of Rs.20 lakhs

Step 6.4: Make sure your business insurance covers your needs

However you opt to line up, don’t forget to think about your insurance needs. Legal action against your business could seem an unlikely prospect when you’re just starting, but it’s better to be safe than sorry.

Key covers for recruitment agencies to consider:

1) Public liability insurance – in case someone is injured or their property is damaged because of your business.

2) Professional indemnity insurance – in case you give faulty advice that causes financial loss to a client.

3) Employers’ liability insurance – in case someone who works for you becomes seriously ill or is injured as a result of working for you.

4) Business premises insurance – paying out for repairs and rebuild costs in case your business premises are destroyed or damaged.

Step 6.5: ESI & EPF Registrations

As your consultancy will be involved with hiring candidates and helping the employers getting the suitable pick, Employee Provident Fund and Employees’ State Insurance registration is mandatory. ESI provides medical insurance and security for the person insured as well as for the members of his family. If your company has at least 10 employees at the time of registration, this shouldn’t be missed at any cost for the well being of your employees. All you would be needing is quick registrations for obtaining EPF and ESIC Code No for the establishment of your recruitment agency. ESIC is an autonomous corporation under the Ministry of Labour and Employment, Government of India.

Step 6.6: Open a business bank account

Open up a small business account at your bank. To carry out any transactions you would be requiring a business bank account. Based on the entity type you choose to register your business, different documents will be required to submit as proof. This account will be essentially a one-stop financial reference for your business operations and as well for the government.

Step 6.7: Payroll Processing

  • Endeavor to make sure the proper reception of the emigrant by the employer within the country of employment
  • Should maintain proper books of accounts, Memorandum of association, Rules, Bye-Laws as the case may be and the details of the office-bearers of the organization and details of persons employed by the agency
  • Payroll processing and Quarterly Vendor Audits of the Contractors
  • Preparation & submission of quarterly, half-yearly, annual returns, and accounts

Step 7: Learn how to effectively find the best employees for a particular job

To be competitive within the recruitment agency business, you want to know how to urge the simplest and most qualified workers to use in your temporary employment agency. Many employment staffing agencies generally take advantage of advertising to urge job hunters and careers shifters to use in their employment agencies.

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Your international recruitment agency also can make use of this strategy so you’ll have a pool of qualified workers which will slot in the qualifications needed by your clients. Giving your clients the simplest available workers will help your HR recruitment agency become a reputable and efficient agent.

Step 8: Choose a location

Location plays an important role in the success of your business. Select a location for your recruiting agency. Whether this means working from your home or an office setting, determine your location. Choose a professional and centrally accessible location to increase visibility and access for both clients and job applicants. But bear in mind that you can still place candidates at businesses in locations that are not physically close to you.

  • Determine the small business tax deductions you are eligible for after deciding on your location. For example, if you work from home, you can likely claim office costs, including rent
  • Estimate the space you will need to conduct your operation and don’t pay for anything more than that

Step 9: Decide on your business and pricing models

As fixing without business premises will offer you one less overhead to require under consideration, you’ll potentially be ready to offer more competitive rates. Just bear in mind that this may become an issue if your business grows and you decide to take on staff.

Will you charge commission or will you charge a flat fee on the successful placement of a candidate? Many recruitment agencies charge a percentage of the candidate’s salary, on a wage scale.

Deciding on your target market will assist you choose pricing. For instance, smaller businesses may like better to pay a flat fee due to them generally having lower amounts of available cash, while larger organizations may haven’t any issue with paying commission.

Step 10: Marketing plan

First, create a logo and image that meet your agency’s style. Then create a recruiting agency marketing plan. Start with a list of potential clients. A list of companies in a particular industry may be your contacts, or a general list you have obtained from an Internet search. Decide on the marketing approach, such as contacting prospective clients by mailing letters, sending e-mails, and/or following up with phone calls.

  • Place advertisements in newspapers, business magazines, and online job sites to recruit job applicants
  • Produce marketing materials, such as a logo for office documents, a company newsletter to send to prospective clients, and company business cards


To start a recruitment company, you would like to try to do your research then make an idea. Starting a recruitment agency is not hard but you need to prepare for both good and bad. Make an efficient plan and work on your niche so that you’ll have a benefit of experience.

One needs to work on the ground than paper to start a recruitment agency. Making new clients, setting interviews, selecting the right candidates, and taking responsibility for these candidates is a huge task, and keep in mind that no one wants to work with you if you can’t give better services than others. A good plan always helps you and business. So prepare well and elaborately.

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