How do you start a recruiting agency?

LiveRec EditorialUpdated

To start a recruiting agency, choose a niche, pick a business structure, register the business, get an EIN, check licenses and permits, open a business bank account, get insurance, write a fee agreement, find your first clients and set up tools. The US Small Business Administration lists these launch steps.

US federal rules as of 31 October 2026. State and local licensing differs.

At a glance

  • You sell a service: introducing candidates to companies for a fee. Start narrow.
  • Cash flow is the hardest part: fees come after a candidate starts.
  • Check what licences your state requires for employment or staffing activity before you start.
  • Keep your costs low until you have placements.

The 10 steps

  1. Pick a niche. A role family, industry or region, for example accounting roles in one city. Specialization makes you easier to remember.
  2. Choose a business structure. The SBA lists this as a core launch step. Ask an attorney or accountant which fits you.
  3. Choose a name and register the business with your state.
  4. Get a federal tax ID. The IRS says an EIN is free from the IRS, and is needed for example if you have employees or operate as a partnership, LLC or corporation.
  5. Apply for licences and permits. The SBA lists this step. Ask your state labor department and secretary of state whether staffing or employment agency licences apply to your model.
  6. Open a business bank account.
  7. Get business insurance. Ask an agent about general liability and professional coverage.
  8. Write your fee agreement. Use the recruiter fee agreement template and have an attorney review it.
  9. Find your first clients. Follow how to get clients as a recruiter.
  10. Set up your tools. A place to track clients, jobs, candidates and placements, and a way to invoice.

Which model should you start with?

Many new agencies start with contingent search: you are paid when a candidate starts. See contingent vs retained. Choose a fee percentage with this guide.

Plan your cash flow

Placements take weeks, and the fee comes after the start date. Track expenses monthly and keep a reserve. A guarantee may delay full income, so read guarantee periods.

Contractor or employee recruiters

If you add recruiters, classification matters. The IRS says the decision depends on the facts. See contractor vs employee.

Using LiveRec

LiveRec has a Live Recruiter portal for agencies. See what a Live Recruiter is and how to join and agency profile and directory.

FAQ

Do I need an office? That is your choice. Your business registration and local rules may require an address.

Do I need a licence? It depends on your state and model. Ask your state labor department.

How do I price fees? There is no standard. See placement fee percentage.

Sources

  • SBA, Launch your business - https://www.sba.gov/business-guide/10-steps-start-your-business (accessed 31 October 2026)
  • IRS, Employer ID Numbers - https://www.irs.gov/businesses/small-businesses-self-employed/employer-id-numbers (accessed 31 October 2026)
  • IRS, Independent Contractor (Self-Employed) or Employee - https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee (accessed 31 October 2026)

This is general information, not legal, tax or immigration advice. Rules change and your situation may differ. Consult a licensed attorney or qualified adviser.