What You Need to Know When Setting Up a Recruitment Agency

If you’re an experienced recruiter and want to look at setting up a recruitment agency, our guide on how to start a recruitment agency will help you get started. QUBA Solutions partners with many new start agencies every year and we’ve seen first-hand how a knowledgeable recruiter can go from being an employee to running a hugely successful recruitment business and making significant profits.

How to start your own recruitment agency

1. Choose your company name and incorporate:

No guide on how to start a recruitment agency would be complete without first addressing company names. Ideally, you don’t want to be changing your company name for example, King Driving Recruitment Ltd is going to be problematic if you wish at some point to explore the IT, Construction or Education sectors.

Follow this link to check if your chosen name is available – https://beta.companieshouse.gov.uk/company-name-availability.

Once you’ve found a company name that’s not being used, you’ll need to incorporate the business by going to https://www.gov.uk/limited-company-formation/register-your-company. It will typically take 24 hours for the certificate of incorporation to be sent to you via email.

2. Register for appropriate taxes:

To begin placing contractors, you need to ensure that your agency is compliant with several critical legal and administrative requirements. Below is a quick guide to what you need in place:

1. PAYE Registration

Register as an employer to operate PAYE (Pay As You Earn) for deducting Income Tax and National Insurance contributions from employee wages.

👉 Register as an employer for PAYE

2. VAT Registration

Most agencies need to register for VAT (Value Added Tax), especially if your turnover exceeds the VAT threshold.

👉 How to register for VAT

3. CIS Registration (For Construction Sector Agencies)

If your agency operates in the construction industry, you must register under the Construction Industry Scheme (CIS).

👉 Register for CIS

4. Unique Tax Reference (UTR) Number

You will automatically receive a UTR number after registering your business. This typically takes 10 working days from the formation of your company.

5. PAYE Reference Number

This number is provided by HMRC once your PAYE registration is complete. It is required to manage payroll for employees.

By ensuring these registrations are complete, your agency can operate smoothly and remain compliant with UK regulations.

Let me know if you’d like help with any of these steps!

3. Choose relevant partners:

Building a Compliant and Effective Recruitment Agency

Running a successful recruitment agency requires partnerships with credible businesses and the right tools to ensure compliance, operational efficiency, and competitive advantage. Here’s a checklist to help you establish a strong foundation:

1. Finance and Back-Office Support

When discussing how to start a recruitment agency, finance is absolutely crucial. Partnering with the right financial and administrative providers is crucial to ensure smooth operations:

• Back-office solutions: Consider working with specialized providers like QUBA Solutions, which offer tailored recruitment back-office services.
• Invoice finance: Opt for traditional invoice finance providers, including mainstream banks, to manage cash flow and support contractor payments.

2. CRM System

Invest in a reliable Customer Relationship Management (CRM) system to efficiently manage client and candidate data, track placements, and automate workflows. Popular options include:

• Bullhorn
• Vincere
• Salesforce

3. Business Insurances

Before placing contractors, ensure your agency has the following essential insurances:

• Public Liability Insurance: Protects against claims for injury or damage caused to third parties.
• Employer’s Liability Insurance: A legal requirement if you employ staff, covering claims for work-related injuries or illnesses.
• Professional Indemnity Insurance: Safeguards your business against claims of negligence or errors in the recruitment process.

4. Business Bank Account

Open a dedicated business bank account to manage your agency’s finances effectively. Ensure it allows for features like:

• Multiple payment processing options.
• Integration with accounting software.
• Scalability as your business grows.

5. Job Boards

Partner with well-known job boards to access a wide pool of candidates and advertise roles effectively. Examples include:

• Indeed
• Reed
• CV-Library
• TotalJobs

6. Website and Marketing

Your online presence plays a critical role in attracting clients and candidates.

• Website: Build a professional website showcasing your services, sectors, and expertise. Ensure it’s mobile-friendly and optimized for search engines (SEO).
• Marketing: Invest in digital marketing strategies, including social media, email campaigns, and content marketing, to build brand awareness and generate leads.

By partnering with reputable providers and setting up the right infrastructure, you can ensure your recruitment agency is positioned for success. Let me know if you’d like additional recommendations!

How can QUBA Solutions help with setting up a recruitment agency?

As an established recruitment financier, we can help take care of the back office services such as payroll, invoicing, credit control, HMRC Reporting and provide credit insurance. Leaving you to do what you are best at; recruiting and building your successful recruitment business.

Your contractors will be paid weekly or monthly and your margin is paid across to you weekly too! There are no upfront costs or hidden fees – our fee is a flat percentage on your weekly net invoice value meaning you will only pay when you’ve got contractors out. So contact us today to see how we can help.

Did you find this guide on how to start a recruitment agency helpful? Let us know!