Governmental Requirements to Start A Staffing Agency

Rules, regulations, processes – there are many steps required to start a staffing agency and it may seem confusing on the surface. We’re constantly asked: What are the requirements to start my own staffing company? Can you tell me the main steps to follow before opening my own staffing business?  

Aside from the regulations you need to follow, staffing companies are relatively easy to start if you have the right guidance. At Encore Funding, we recommend you take these four crucial steps – in no particular order – to start your own staffing company. Watch the video below.

Create Your Business 

Research the local requirements for creating a business in your state. These may even vary from city to city, so be sure to check with your county clerk’s office or secretary of state. You may also need additional certifications to place employees in certain industries like health care or the legal field.  

Many states and counties have business development offices that are designed to help you get a business up and running. The U.S. Small Business Administration is a great place to begin. 

Gain Business Insurance 

Staffing agencies need sound business insurance policies to protect them from liability and remain compliant with the law. When you start your own staffing agency, you’re required to carry commercial insurance and general liability insurance as well as workers’ compensation insurance coverage.  

Unsure how much insurance you legally need? Meet with an insurance agent to develop a policy that protects you and your employees.  

Know Your Tax Plan 

For business owners, tax surprises are rarely a good thing. Before you venture on your own, ask a tax attorney or accountant what tax responsibility your agency will have under federal and state law.  

Most states consider temporary staffing agencies to be the employer of any temporary employees. In addition to business taxes, your agency could be subject to employment taxes, including temp agency payroll taxes, Social Security, Medicare, federal income tax withholding and federal unemployment taxes. 

Once you register your business, you’ll receive a state tax identification number. In addition, you should request an Employer Identification Number (EIN) from the IRS. You’ll need this federal tax ID number for tax administration. 

Learn EEOC requirements 

If you employ more than fifteen staff members in your agency, you’ll be expected to work within the Equal Employment Opportunity Commission (EEOC) guidelines to create a fair and equal workplace.  

You and your employees could face legal recourse if either party violates EEOC regulations like the Americans with Disabilities Act. Learn more about how EEOC regulations apply to staffing companies. 

One Step at a Time 

Don’t worry if these steps feel complicated. Take the time you need to properly research and build the foundation of your staffing agency. Questions? The Encore Funding team is here to help. Reach out to our team here. 

VIDEO: Insights for Requirements to Start a Staffing Agency