How much does it cost to start a staffing agency or search firm? A 2026 budget for the US and UK

Starting a staffing agency or an executive search firm costs very little in paperwork and a great deal in time. The official fees are small: in the US an Employer Identification Number is free from the IRS and state filing fees run from tens to a few hundred dollars (California charges $70 to form an LLC, then an $800 annual tax), and in the UK a limited company costs £100 to register online and the ICO data protection fee starts at £52 a year. The lines that decide your budget are software and candidate data, insurance, a lawyer's review of your terms, and above all your runway: the months of business and living costs you carry before the first fee arrives. If you supply temporary or contract workers, add the wages you pay before clients pay you, which is usually the largest number on the page. A permanent or retained search desk run from home needs no payroll float, so its real cost is mostly runway.

This guide sets out the budget line by line, separates the costs that are fixed by law from the ones you set yourself, and shows how to size your runway with your own numbers. Published fees are sourced and dated. Where nobody publishes a reliable number, we say so and do not guess. For the full setup, read how to start an executive search firm, how to start a recruitment agency in the US or how to start a recruitment agency in the UK.

Key takeaways

• The model decides the budget more than anything else. Permanent placement and retained search need your own runway only. Contract and temporary staffing make you the payroll for every worker you place, so you need working capital to fund wages before clients pay.
• Fees fixed by law are small, as of November 2026: a free IRS EIN, state LLC fees such as California's $70 filing fee and $800 annual tax, and in the UK £100 to register a company online, £50 a year for the confirmation statement and £52 a year for the ICO fee for a micro business.
• The costs you set yourself are larger: recruiting software, candidate data, insurance, legal review of your terms, a website and your own time. Several are quoted only on request, so get written quotes before you resign.
• Runway is the real start-up cost. Count the months from your first day to the day the first fee is in your bank account, then multiply by your monthly business and living costs.
• Published estimates for a lean, home-based permanent desk cluster in the low thousands for setup, before runway. Treat every published range, including ours, as a starting point for your own quotes.

Why there is no single answer

The question "how much does it cost to start a staffing agency" hides three different businesses. Each needs a different amount of money, and the difference is not the setup but the cash you have to carry.

For a search firm or a permanent desk, the budget is mostly you: your living costs and a small stack of tools. For a temp or contract agency, it is mostly other people's wages, paid weekly while clients pay on 30-day or longer terms. Read every published estimate with that in mind, because most of the large numbers you see online describe temp staffing.

Which costs are fixed by law?

These are the lines you cannot negotiate. They are published by governments, so they are the only figures on this page that are the same for everyone.

United States

• Employer Identification Number: free. The IRS issues it online, and you should never pay a third party for it.
• Entity formation: set by each state. As examples, California charges $70 to file Articles of Organization for an LLC, and every LLC organised or doing business in California then owes an $800 annual tax to the Franchise Tax Board, including in its first year. Delaware charges every LLC a $400 annual tax, due by 1 June.
• Employment agency licences and bonds: in most states, none for an agency paid only by employers. Where they apply, they add real cost. California requires a $3,000 surety bond for agencies paid by job seekers, Massachusetts registration starts at $300 a year even for employer-paid agencies, and a licensed New York City agency needs a $5,000 bond. Our US guide sets out the rules state by state.
• Self-employment tax: if you trade as a sole owner, generally 15.3% of net earnings (12.4% Social Security up to the 2026 wage base of $184,500, plus 2.9% Medicare). Budget for it from the first fee.

United Kingdom

• Company registration: £100 online with Companies House, or £124 by post, since 1 February 2026.
• Confirmation statement: £50 a year online, due every year even if nothing changes.
• ICO data protection fee: £52 a year for a micro organisation and £78 for a small or medium one, £5 less by direct debit. An agency holds personal data on every candidate, so it pays this fee.
• VAT: registration becomes compulsory once taxable turnover passes £90,000 in a rolling 12 months. One senior permanent placement can be a large share of that, so track turnover from the first invoice.
• Licences: most agencies need none. Supplying workers to agriculture, food processing and some other sectors needs a gangmaster licence, and every agency must follow the Conduct Regulations from its first candidate. Our UK guide covers the detail.

Which costs do you set yourself?

Everything else is a choice, and most of it is priced by vendors, brokers and lawyers rather than published. Use this as a worksheet and fill in written quotes, not guesses.

On software, our guide to what executive search software costs lists the prices vendors publish. In October 2026, published prices for search-focused systems ran from $119 to $179 per user per month, and several vendors quote only. Candidate data is often the larger line and the less predictable one, because many tools charge by credits or by seat on annual contracts. Check the cancellation and renewal terms before you sign anything in your first month: a 12-month contract is a real cost even if you stop using the tool.

What do published estimates say?

Several publishers have put numbers on the whole budget. They are useful as a range, not as data: each is built from its own assumptions, and most are written for temp staffing or for a general UK agency rather than for a search firm. As read on 5 November 2026:

Two things stand out. First, the setup itself is a small share of every budget; the reserve or runway is the large one. Second, the temp-staffing examples need several times more cash than the permanent ones, for the same reason: wages go out weekly and client payments come in monthly. None of these sources is a survey of what agencies actually spent, and neither is this page.

How do you size your runway?

Your runway is the real start-up cost, and you can calculate it. Use this formula with your own numbers:

Cash to have available = one-off setup costs + (monthly business costs + monthly living costs) × months until the first fee is in your account + a contingency.

The hardest number is the months. Count them from your first working day, not from your first signed role:

1. Time to win the first role. It is rarely the first week, even with a strong network, because a client still has to approve a new supplier, its terms and its insurance.
2. Time to fill it. For a senior search, often several months from brief to accepted offer.
3. The candidate's notice period. A few weeks is common in the US; three months is common in the UK and in parts of Europe.
4. Your payment terms. A fee invoiced on the start date on 30-day terms arrives a month later, if the client pays on time.
5. Any restriction from your old contract that delays when you can approach certain clients.

A hypothetical example, to show the arithmetic rather than a benchmark: a solo permanent recruiter in the UK budgets £4,000 of one-off setup, £800 a month for software, data and insurance, and £3,000 a month of personal living costs. If the first role takes six weeks to win, eight weeks to fill, three months of notice and 30 days to pay, the first fee arrives about 31 weeks, or roughly seven months, after the start. Seven months at £3,800 is £26,600, plus £4,000 of setup, is £30,600 before any contingency. Shorten the notice period to one month and the first fee arrives after roughly five months, so the same desk needs about £23,000. The setup is the smallest line in both cases.

How does a retained search firm change the numbers?

Retained search shortens the runway, because the client pays in instalments from the start of the search rather than only when a candidate starts. Practice varies, and the terms are yours to negotiate, but retainers are commonly paid in stages such as on signing, at the shortlist and on completion. Our page on retained executive search sets out how fees and instalments usually work.

For the budget, that has two effects:

• The first cash arrives earlier. If the first instalment is due when the engagement is signed, your runway runs to the first signed retainer, not to the first start date.
• Each assignment carries more of your fixed costs. A retained firm runs fewer, larger searches, so the stack is smaller but research matters more: market mapping, candidate data and the time to build a proper longlist.

The runway is still real. A new firm without a track record often wins its first roles on contingency or with an engagement fee before clients agree a full retainer, so budget as if the first one or two roles pay late.

How much more does a temp or contract agency need?

Much more, and for a reason no setup line shows: you pay the worker before the client pays you. Every week a worker is on assignment, you fund their wages and the employer's taxes and insurance, then wait for the client's invoice to clear.

To size it, take the weekly pay of every worker you expect to have on assignment, add employer costs, and multiply by the number of weeks between payday and the client's payment. In the US those employer costs include federal unemployment tax at 6.0% of the first $7,000 of each employee's wages (0.6% after the full state credit), state unemployment tax and workers' compensation. In the UK they include employer National Insurance, pension auto-enrolment and holiday pay. The figure grows with every worker you add, which is why fast-growing temp agencies often use invoice finance or factoring. Read the costs of that finance as part of your margin, not as free money.

If you plan to start with permanent or retained work and add contract later, budget for the permanent desk first. Starting a payroll business on day one, alone, is the most expensive way in.

What does the money cover in year one?

A practical way to present the budget, to yourself or to a lender, is the split the SBA uses: one-off costs, then at least a year of monthly costs.

In the US, some of what you spend before you open can be deducted. The IRS lets a new business elect to deduct up to $5,000 of start-up costs and up to $5,000 of organisational costs in the first year, each reduced by the amount the costs exceed $50,000, and amortise the rest over 180 months. Ask an accountant how that applies to your entity before you file.

How can you start for less?

Most of the savings come from what you delay, not from what you skip:

• Work from home until a client meeting room is the bottleneck. Check local zoning or business licence rules where you live.
• Start with one model. Permanent or retained first; contract later if at all.
• Buy software monthly in the first months, or annually only once you know you will keep it, and choose a system you can export from.
• Delay paid job boards and data tools until a live role needs them. A specialist search desk often starts from its own network.
• Pay a lawyer once for terms you reuse, rather than drafting from a template you do not fully understand.
• Ask for an engagement fee or a retainer on roles that need real research. It is the single biggest lever on runway.

Do not save on insurance a client asks for, on legal advice about your restrictive covenants, or on data protection. Each is cheap compared with the dispute it prevents.

What are the costs people forget?

• Your own tax. Lumpy fees can produce a large tax bill in a good quarter. In the US, estimated tax is due in four instalments; in the UK, Corporation Tax and VAT come later than the cash. Set aside a share of every fee the day it lands.
• Guarantee periods and rebates. If a hire leaves within the guarantee, you may owe a replacement or a partial refund. Do not spend a fee until the guarantee has passed, or keep a reserve against it.
• Late payers. Your runway ends when the cash arrives, not when the invoice is sent. In the UK you can charge statutory interest on late business payments unless your contract says otherwise.
• Health cover and retirement if you are leaving an employer that paid for them, in the US especially.
• Time. Every hour you spend on admin is an hour you are not winning or delivering a role. That is a cost even when it never appears on a bank statement.

What are the honest downsides?

• Most of the cost is uncertain. You can price the setup to the pound or dollar. You cannot price the months to your first fee.
• The first year often pays later than planned, even for recruiters with strong networks.
• Concentration risk. If one client produces most of your early fees, a hiring freeze there can end the runway early.
• Nobody publishes reliable survival or earnings figures for new agencies or search firms, and we will not invent them. Anyone who quotes a precise first-year number is quoting their own case.

Where does Topliner fit?

Topliner is an executive search OS for independent and boutique search firms. We sell software and research in this category, so read this section as a vendor's view.

If you are starting a retained or specialist search firm, Topliner holds each search as one record: brief, market map, off-limits, approaches, shortlist and client report, with an ATS and CRM on the same data. Senior researchers can run the research beside you, so a new firm can deliver a mapped market without hiring a research team. Topliner is not built for temporary staffing or high-volume hiring.

Topliner is not sold per seat. It works with independent firms as a partnership, on a revenue share, by invitation, so the cost follows the searches you run rather than adding a fixed line to your runway. A revenue share is not automatically cheaper than a licence, so compare it with your expected fees.

How do you budget a new agency or search firm, step by step?

1. Choose your model first: permanent, retained, contract, or a mix. It decides whether you need payroll working capital.
2. List the fees fixed by law where you will trade: entity formation and annual fees, the EIN or Companies House and ICO fees, any licence or bond.
3. Get written quotes for legal review, accountancy, insurance, software and candidate data.
4. Split the budget into one-off, monthly and annual costs, and count at least a year of monthly costs.
5. Estimate the months to your first fee in the bank: time to win, time to fill, notice period, payment terms.
6. Multiply those months by your monthly business and living costs, add the one-off costs and a contingency.
7. If you supply temps, add payroll working capital for the workers you expect to place, and decide how you will fund it.
8. Decide what you will delay, and what you will not save on.
9. Set aside tax and a guarantee reserve from every fee, and review the budget every month against the cash that actually arrived.

How we know

US figures: the EIN process is from the IRS page get an employer identification number. The self-employment tax rate and the 2026 Social Security wage base are from the IRS page on self-employment tax. The start-up and organisational cost deduction is from IRS Publication 583 and 26 U.S.C. § 195. The California LLC filing fee is from the California Secretary of State's Form LLC-1 and the $800 annual tax from the Franchise Tax Board. The Delaware LLC annual tax is from the Delaware Division of Corporations. The SBA's split of one-off and monthly costs is from its guide to calculating start-up costs.

UK figures: company registration and confirmation statement fees are from Companies House's fees schedule and its notice that fees changed on 1 February 2026. The ICO fee is from the Data Protection (Charges and Information) Regulations 2018 and the ICO's guide to the data protection fee. The VAT threshold is from HMRC's VAT registration guidance. US state licensing, FUTA, UK licensing and late payment rules are sourced in our US and UK guides, and published software prices in our software cost guide. All were read between 2 and 5 November 2026.

The published estimates are quoted from the pages linked in the table, read on 5 November 2026, and are those publishers' assumptions, not ours. The runway example is our own arithmetic from the stated assumptions, not a benchmark. This is a general guide, not legal, tax or financial advice. Fees change, so check them before you budget.

If you are setting up a specialist or retained firm and want the research loop on the system we use ourselves, request an introduction.

Questions people actually ask

How much does it cost to start a staffing agency?

The legal setup is small: a free IRS EIN and a state filing fee in the US, or £100 to register a company online in the UK. The real cost is your runway until the first fee arrives and, for a temp or contract agency, the wages you pay before clients pay you, which can be several times the setup cost.

How much money do I need to start a recruitment agency from home?

For a permanent or retained desk run from home, published estimates for setup start in the low thousands, before runway. Add your monthly business and living costs multiplied by the months until your first fee is paid; that number is usually the larger one.

What does it cost to start a recruitment agency in the UK?

As of November 2026, £100 to register a limited company online, £50 a year for the confirmation statement and £52 a year for the ICO fee for a micro business. Insurance, software, legal review of your terms and your runway make up the rest, and they depend on your model and quotes.

Is it cheaper to start a search firm than a staffing agency?

Usually, yes. A permanent or retained search firm needs no payroll working capital, so its budget is mainly runway and a small stack of tools. A temp or contract agency funds its workers' wages before clients pay.

Can you start a staffing agency with no money?

Not with none. You will pay at least the entity fees, insurance a client asks for and basic tools, and you need enough to live on until the first fee arrives. A temp agency also needs working capital or finance for payroll.

Is a staffing business profitable?

It can be, but nobody publishes reliable profit figures for new agencies, and we will not invent them. Profit depends on your fee level or margin, the share of roles you fill and how long you wait for cash.

What is the biggest start-up cost for a recruitment agency?

For a permanent or retained desk, your own runway: months of business and living costs before the first fee is paid. For a temp or contract agency, the payroll you fund before clients pay.