How to Establish a Staffing Agency

Unemployment lines are filled with those seeking work, while companies are faced with reducing the numbers of employees in their human-resources departments in order to preserve their bottom lines. Due to these reductions in staff, companies are outsourcing the hiring of their employees via privately operated staffing agencies that specialize in matching worker skills with the needs of employers. As a new staffing agency, you become the actual employer and you "lease" your worker base to companies for a fee. As you are the employer, it is your responsibility to handle all of the employer tax and hiring laws.

Things You'll Need

• Computer with word-processing software
• State and federal employment tax-table charts
• Staffing-agency database and operations software (your personal choice based on needs of your business plan)
• Two or three large filing cabinets
• Workman's Compensation Insurance

Instructions

1. Research what your initial start-up costs are going to be for your agency, as well as what your monthly on-going expenses will be for your basic operational needs. Call around to printing companies and inquire what it will cost for you to have your promotional materials printed, what your costs for printer paper employment-application forms will be. Of course, you will save money if you are able to create and print the forms yourself. Compare prices and capabilities of employment staffing agency software packages and select the package that matches your budget while meeting your needs.

2. Draft a business plan for your staffing agency. In the plan, break down your first two years of business, setting expense projections as well as income goals you intend to meet. Be sure to research all aspects of your local market to be sure you will be able to reach your desired goals. Determine the fee structure you will charge companies for your services and what percentage your employees will have withheld from their paychecks to pay you for finding them jobs. Be realistic with your forecasts and your goals, bank loan officer will base his lending decision upon the realism of your business plan.

3. Visit several banks and inquire about a business loan, comparing interest rates. When applying for a business loan, try to keep your loan amount in the $30,000 to $50,000 bracket, which should be just enough to cover your business needs and your costs of living until you begin getting payment for your agency's activities.

4. Set up your office and prepare a filing system, which you should organize for ease of operations. Set up one filing cabinet drawer for IRS forms, employment applications and other forms you will give to your prospective employees to read, fill out, and sign. Set up another filing cabinet with alphabetical labels on folders to file the documents for each employee you hire.

5. Install your staffing agency operations and database software onto the office computer system or network. Spend ample time learning how to use your software so that you may access all areas of it relatively quickly when dealing with applicants and companies with whom you are doing business.

6. Mail promotional information to the businesses and companies in your desired geographical area so they know about your staffing agency. Put word out in your local area using word-of-mouth, posters, and fliers, to notify job seekers in your community that you are accepting applicants.

7. Interview job applicants and formulate a roster of skills your interviewees may have to offer to the local job market. With very few exceptions, all professional staffing agency software-database packages permit you to categorize the skills workers have, so you may use search tools to match prospective employees with employers needing those particular skills. Use the roster to notify companies of those workers you have available to fill their needs.

8. Withhold all Social Security (employee AND employer share), state income tax, FICA and Medicare taxes from every employee's checks as required by law. Place these funds into a separate bank account you set up strictly for the purpose of keeping these funds for submission to the proper government agencies when paying your quarterly payments.

9. Maintain workman's compensation insurance for all of your employees. Since you are the actual employer, you are responsible to maintain this.

10. Work to meet the deadlines and goals in your business plan. Once you have met each goal or guideline, amend your business plan for another two-year period with new goals and guidelines. Continue building your staffing business and never allow yourself to be without goals for expansion.

Tips & Warnings

• Since staffing agencies are highly subject to frivolous lawsuits, it would be most beneficial for you to purchase business liability insurance and a bond for your staffing agency. This will help in covering any legal expenses in the event you are sued.

References

• Internet-Based Moms: Start an Employment Agency
• Brighthub: Starting a Successful Employent Business
• My Own Business: Business Plan
• All Law: Employer Payrol Taxes