How much it costs to start a recruitment agency
Ever dreamt of starting your own recruitment business? The freedom, flexibility, and potential for success are all undeniably attractive. But, it's crucial to understand the finances of starting your own agency.
From licensing fees to technology expenses, the true cost of entry might surprise you. So make sure you follow this list and budget accordingly.
Although there are a million new systems, tools, or add-ons that you could buy (or will be advertised to you) that could simplify your recruitment process, we’ll cover the bare necessities that will suffice in getting you up and running.
Let’s dive into how much it costs to start a recruitment agency.
Setting up
Incorporation
Incorporating your business is a one-off non-negotiable. Registering your company in Delaware or Wyoming is standard practice for new businesses that are based online or location-independent. This is due to their low state taxes. Check out companies like LegalZoom to help you get set up without a lawyer.
Cost: $500, one-time fee.
EIN Number
Your Employer ID (EID) Number is a unique number for your company that is used for tax purposes, opening bank accounts, and any other official back office due diligence. However, your EIN is not included with your company’s incorporation, so you’ll need to submit a form to the IRS.
Cost: Free (If you’re not a US citizen, there may be a fee attached so check with the IRS).
Website & Email
Granted, you can build a website on your own for much cheaper on Wix or WordPress but if you’re serious about winning in today’s market, you’ll need to summon an expert. You can hire an expert freelance web builder on sites like Fiverr or Upwork who will create a bespoke website, like this, for you for a few hundred dollars. It will usually take no longer than 2 weeks from start to finish.
In addition, you’ll have to pay monthly expenses like
- Your domain: $35-$50 per annum ($3-$4 per month).
- Site hosting: $5-$20 per month.
Once you have your website, you can create a professional work email like elon.musk@tesla.com on Microsoft 365 or Google Workspace for $6-$8 per month per user.
Cost: $300-$900.
Branding
Although Canva is free and provides basic logo and brand design, to compete with the best you’ll have to summon a graphic designer to create a logo and brand colors.
You can find someone on a freelancer platform who will create your branding in a day’s work.
Visitors to your website and social media profiles can tell the difference between a logo created by a professional and one created with Canva or AI.
Cost: $50.
Legalities
You’ll want to create terms of business for clients–and possibly candidates depending on your recruitment model– and any other employee contract. You can use the services of platforms like Termly to help you create free terms of business contracts.
Although a free terms-of-business contract via Termly will suffice, you can always hire a lawyer to look over everything if you’re unsure. They range from $700 upwards on Contractscounsel.
Don’t forget to add a privacy policy on your agency website, too.
Cost: Free ($700+ for a lawyer to go over everything).
Operational costs
After you’ve set up your recruitment agency, you’ll have ongoing maintenance costs. Let’s break it down.
Technology
Although there are numerous technology systems to help you recruit better we’ll cover the basics that you need in the beginning.
ATS
Applicant Tracking Systems help you keep track of all your candidate data and organize your recruitment process. Prices vary in features and depend on your business scope. Systems like JazzHR start from $49 per month and more advanced ones like Bullhorn begin at $199 per month.
It depends on what your goals are and hiring process is like. For more on choosing an ATS, check out our blog here.
Cost: $49 per month.
CRM
A Customer Relationship Management system helps you to keep track of all your interactions with potential clients and automates things like emailing, scheduling, and tracking data.
For recruiters, having quality and recruitment-specific CRMs can help them keep track of business development, job postings, and analytics on how the hiring process is going.
An easy-to-use system like Recruiterflow costs $85 per month and also incorporates an ATS function.
Cost: $85 per month.
Contact Finder
To win new business, you’ll have to reach out to potential buyers and hiring managers. Beyond the 20 free LinkedIn messages you get per month, and your networking efforts, you’ll have to find contact details of prospects to call and email them about your offering.
Contact finder tools like Apollo.io or Hunter.io will start at around $30-$50 per month.
Cost: $30 per month.
LinkedIn Recruiter
The biggest cost when starting a recruitment agency is LinkedIn Recruiter (Lite, Professional, or Corporate). The tool gives recruiters access to over 880 million candidates on the biggest professional networking site. The recruitment packages allow you to advance search via Boolean strings and engage directly with almost any candidate on the site.
The price packages for LinkedIn Recruiter are:
1. Lite: $170/month (single license), $270/month per license (licenses 2 - 5)
or
- $1,680/year (single license)
- $2,670/year per license (licenses 2 - 5)
2. Professional: $800 per month ($9,600 a year).
3. Corporate: $1080 per month ($12,960 a year).
Cost: $2,040 - $12,960 per year.
Job boards
If you want to post job roles on job boards like Indeed, Glassdoor, and Monster, you’ll need to budget around $200-$250 per month for each one.
After a while when your recruitment business takes off and gets recurring jobs and becomes known to a wide network of candidates, you can look to create your own job portal on your website.
Cost: $200 per month per job board.
Accounting
Tracking your ins and outs is crucial not just for tax purposes but for your business as a whole. There are many tools like Quickbooks for you to do your accounting yourself, but as a busy agency owner, it’s worth investing in a virtual accountant.
Platforms like 1-800 Accountant will handle all your accounting from $139 a month.
Cost: $139 per month.
Insurance
You’ll need to get General Liability Insurance for your business when you start out. As you grow, keep in mind that the federal government requires every business with employees to have workers’ compensation, unemployment, and disability insurance.
The average general liability insurance costs $1,057 per year but will be higher or lower depending on your business and location.
Cost: $1,057 on average.
Final tips
Starting and running a successful recruitment business isn’t for everyone. It takes entrepreneurial spirit, determination, and a ton of hard work and long hours.
There’s no exact number on how much it costs to start a recruitment agency as it varies by what location you’re in, niche, and initial team size but there’s a ballpark range.
When you start out, you will need around $2,000, in the beginning, to get your business registered legally and to create a website and other branding bits and pieces.
After setting that up, you’ll move on to the technology and can expect to pay $150-$200 a month for your toolkit.
For all the legal stuff, insurance, and accounting, this will be around $250-$350 a month.
Your most expensive subscription will be LinkedIn Recruiter. This can be up to $1,080 a month plus additional InMails once you use your limit of 150 ($10 per InMail).
You don’t need to buy the most expensive tools or post all your jobs on job boards but it’s important to nail the non-negotiables like business incorporation and an ATS.
As you grow, you can invest in tools to automate your processes and other things like Payroll and HR for new employees.
This should give you a rough idea of what to budget for and how much it costs to start a recruitment agency. If you have the initial budget and experience in your niche, then get started, put in the hours, track your progress, and rejig when necessary.
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