Setting up a successful recruitment agency: a step-by-step guide
The first hurdle any recruitment business founder will likely face is incorporating their business into a UK company so that the business can operate as a separate and legal entity.
A recruitment agency must be incorporated at Companies House in order to act as a business under the Companies Act 2006. When incorporating a new recruitment company, the founder must undertake certain obligations of notification and filing on behalf of the business.
Company formation can be overwhelming for business owners looking to incorporate their business in the recruitment industry. Company law is complex and the legal requirements required for company registration can be overwhelming.
This guide outlines the things you will need to take into account when setting up your own recruitment agency and the processes you are required to complete when you decide to incorporate a company in the United Kingdom so that you can begin to provide recruitment services.
1. Company Type
Work out what type of company you are going to incorporate your recruitment agency as. In the UK, private companies limited by shares are the most popular so you might want to start by thinking about whether this company type suits your business.
2. Choose a Company Name
One of the first things you will likely do when you start a recruitment agency is to brainstorm names for your business. You need to ensure that your company name is unique, different from those of other recruitment agencies and employment agencies in the recruitment sector and does not contain sensitive words.
Read more about the requirements for choosing a name for your recruitment agency.
3. Choose your company's registered office
You will also need to choose an official address for your company- its ‘registered office’- so that departments like HMRC and Companies House can deliver important information like legal notices, reminders and statutory updates. The address must be located in the same country that you are incorporating your recruitment agency but it does not have to be where your company carries out its business activity.
For example, if you incorporate your recruitment agency in England, your office address must be in England but it doesn’t necessarily have to be the office space in which you and your team work. You will also want to select a service address so that you can receive communication from other parties. This address will be made visible to the public on the public registrar.
Learn more about how to choose your company office.
4. Members and persons with significant control
If you incorporate a private company for your recruitment agency, you will be required to embark on an executive search and appoint at least one director. You will also need to provide the director's addresses as part of your application. You also need to identify all persons that will be Persons with Significant Control (PSC) of the recruitment agency and disclose these as part of your application.
5. Memorandum and articles of association
When you incorporate your recruitment agency, you will need to make your intention to set up a company clear via a Memorandum. You will also need to create a rule book for your company that determines how decisions are made. This rule book is called the Articles of Association. There are Model Articles of Association that you can adopt in their entirety.
Learn more about articles of association.
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6. Share structures
If ownership of your recruitment agency involves share capital, you need to determine the number of shares you will issue and ascribe them a nominal value. You will need to produce a statement of capital and initial shareholders.
7. SIC Code
When you make an application, you will need to provide Companies House with a standard industrial classification (SIC) code. This outlines the intended business activities of your company.
Learn about what SIC codes you might consider picking for your recruitment agency.
8. Submit your application
After you have decided on the above information you will need to complete a form IN01 that outlines the information related to your recruitment agency. You can submit an application by paper, using web services or electronic filing software.
Learn more about how to submit your application.
9. Onboard staff and clients
When you are ready to start work, set up a system to allow you to hire recruiters and begin to approach your target market and potential clients in line with your recruitment business plan. Begin the hiring process by identifying the qualities you are looking for in potential candidates and post tailored job descriptions on online job boards and on social media. Next, interview suitable candidates and begin the onboarding process. Interviewing candidates is often a long process, but ensuring you have a good team around you is integral to the success of your recruitment business.
You can also set up a recruitment agency website for your business to general interest and establish an online presence.
It is also a good idea to set up business insurance to ensure that the agency is protected.
10. Get your legals in order
Once you have finalised the incorporation process, you will need to generate legal contracts to structure your business activities. Creating lawyer-approved agreements can be costly and it can be tempting to download free templates online such as recruitment agency terms of business. However, this process is risky and. thanks to contract management platforms like Legislate, unnecessary. Legislate allows users to tailor the agreements essential to business growth, such as employment, consultancy and internship agreements. To create a lawyer-approved contract, sign up to Legislate today!
The opinions on this page are for general information purposes only and do not constitute legal advice on which you should rely.