How to Start a Recruitment Agency in the UK

Here’s a clear, practical guide on how to start a recruitment agency in the UK, written in simple steps and covering the essentials without overwhelming legal jargon.

Starting a recruitment agency can be a profitable business if you plan carefully and understand the market. Here’s a step-by-step guide to help you launch successfully:

1. Choose Your Niche

Focusing on a specific sector makes your agency more credible and easier to market. Examples:

  • Healthcare

  • IT & tech

  • Construction

  • Finance

  • Hospitality

  • Creative industries

  • Admin & office support

Tip: Pick a niche you understand or have contacts in.

2. Understand Legal and Compliance Basics

You don’t need a specific licence for most types of recruitment in the UK, but you must follow certain regulations.

Key requirements include:

  • Register your business with Companies House (Ltd) or as a sole trader.

  • Comply with the Employment Agencies Act 1973 and the Conduct Regulations (governs how agencies operate).

  • Right-to-work checks for candidates.

  • Data protection compliance (UK GDPR) — you must handle candidate data securely.

  • Insurance: public liability, professional indemnity, and employer’s liability (if you hire staff).

Certain sectors (e.g., healthcare, security) may have additional checks.

3. Build Your Business Plan

Include:

  • Your niche and value proposition

  • Services (permanent hires, temp staff, contracting)

  • Pricing model (percentage fees, day rates, margins)

  • Competitor research

  • Marketing strategy

  • Cashflow plan

Important: Temp recruitment requires strong cashflow because you usually pay workers before your client pays you.

4. Set Up Your Operations

You will need:

  • A registered business address

  • Business bank account

  • Niche specific accountant

  • Recruitment software (ATS/CRM)

  • Contracts and terms of business

  • A professional website

  • Branding (name, logo, messaging)

5. Learn the Recruitment Process

Even if you’ve worked in recruitment before, formalising your processes is key.

Core processes include:

  • Sourcing candidates

  • Screening & interviewing

  • Creating and posting job ads

  • Client relationship management

  • Negotiating placement fees

  • Managing temporary worker payroll

  • Compliance and documentation

6. Create Strong Contracts

You’ll need:

  • Terms of business for clients (permanent or temporary hires)

  • Candidate agreements

  • Clear fees, rebates, and payment terms

A solicitor experienced in recruitment law can help create templates.

7. Market Your Agency

Marketing channels that work well for recruitment:

  • LinkedIn (content, networking, outreach)

  • Job boards (Indeed, Reed, CV-Library)

  • A high-quality website with SEO

  • Cold and warm outreach to businesses

  • Social media presence

  • Industry events and networking

Tip: Build a strong personal brand—people respond more to individuals than company pages.

8. Build Your Candidate Database

A recruitment agency is only as good as its talent pool. Start with:

  • LinkedIn sourcing

  • Job board CV databases

  • Referral incentives

  • University or training provider partnerships

  • Industry groups and events

9. Manage Cashflow (especially for temp recruitment)

If you place temporary workers, expect:

  • Weekly or monthly payroll

  • Clients may take 30–60 days to pay

Many agencies use:

  • Invoice factoring

  • Back-office/payroll providers

  • Recruitment finance companies

This helps you grow without cashflow issues.

10. Stay Compliant and Keep Improving

Recruitment regulations can change, so stay updated with:

  • Conduct Regulations

  • GDPR

  • Right-to-work laws

  • Sector-specific rules

And always refine:

  • Your sourcing methods

  • Your client acquisition

  • Your candidate experience

I hope you find our guide useful if you are thinking of starting your own recruitment business. 

If you would like to find out more about the Accounting Services we offer to Recruitment Businesses book a chat with an Accountant here at www.coopercurtis.co.uk/contact