As businesses go, staffing companies are relatively easy to launch, requiring fewer licenses and less paperwork for business owners than businesses in other industries. So it’s no surprise that starting your own staffing agency is a popular business venture, with new staffing companies popping up left and right. However, if you’re thinking of starting your own staffing agency, as with any business, you need to make sure you’re set up to operate legally for your customers and employees.
Follow these four steps to ensure compliance with governmental regulations when you’re starting your own staffing agency.
Get licensed and registered
Step one is registering your staffing company in the state or municipality where you are planning operations. Learn local requirements for obtaining appropriate business licensing, check online or contact the office of your county clerk or secretary of state. Then register your staffing agency’s name at the designated local office, file your articles of incorporation with the secretary of state, and pay any required registration fees.
To legally place employees in specialized industries such as health care, staffing companies may also need to secure additional licensing. Before starting your own staffing agency, take time to ask your business development office about special licensing information.
Staffing agencies need sound business insurance policies to protect them from liability and keep in compliance with the law. If you’re starting your own staffing agency, you’re required to carry commercial insurance and general liability insurance, as well as workers’ comp insurance coverage if your agency places long-term employees. 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 starting your own staffing company, 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. As a result, 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 get also state tax identification number. In addition, request an EIN from the IRS, a federal tax ID number you need for tax administration.
Learn EEOC requirements
If you have more than 15 employees in your staffing agency, you’ll be expected to work within the Equal Employment Opportunity Commission (EEOC) guidelines for creating fair and equal workplace. You and your employees could face legal recourse if either violates EEOC regulations, such as the Americans with Disabilities Act. Be prepared by reading this 1997 report by the EEOC, which lays out how EEO laws apply for temp staffing agencies.