Why is now a good time to start a staffing agency?

Despite economic uncertainty, staffing remains resilient, with growth in healthcare, IT, logistics, and government sectors, plus remote work opening more sourcing opportunities.

What are the steps to start a staffing agency?

Steps include: choosing a niche, creating a business plan, handling legalities, setting up an office, drafting contracts, securing funding, building a website, and investing in recruiting tools.

What are the biggest expenses when launching a staffing agency?

Startup costs include office space, payroll, marketing, software, legal setup, insurance, job boards, and hidden expenses like delayed client payments and turnover.

Can I start a staffing agency without a physical office?

Yes. Many agencies operate remotely using cloud-based tools, ATS platforms, and virtual interviews, allowing faster, leaner scaling.

Do I need funding or financing to cover payroll when starting a staffing firm?

Yes. Most startups require payroll financing or invoice factoring to cover contractor wages before clients pay invoices.

What legal documents do I need to start a staffing business?

You'll need registration, licenses, contracts, employee agreements, confidentiality policies, insurance, and handbooks. Consulting an attorney ensures compliance.

How much does it cost to start a staffing agency?

Q: How much does it cost to start a staffing agency?

Starting a staffing agency typically costs between $3,000 and $250,000, depending on location, size, and launch model. Options include DIY ($3K–$10K), Hands-On with Help ($11K–$34K), and Fully Outsourced ($35K–$250K).

Mike Brew

Last time updated: August 28, 2025

For an entrepreneurial spirit with a little industry know-how, starting a staffing agency is one of the best and most rewarding things you can do. Staffing is a varied, competitive, high-energy field that rewards scrappiness and hard work. And it can be lucrative, too, depending on your vertical. Typical margins range from 14 and 41 percent, with a median of 25% across all temporary staffing.* According to IbisWorld, there are over 41,000 staffing agencies in the US and it’s a $150 billion dollar industry

If you are looking to start your own staffing agency, one of the main questions on your mind might be, how much is this going to cost me? Based on our 24+ year history of helping staffing firms grow – including many start-ups – we can help you answer that question.

Industry Outlook: Why Now Is a Good Time to Start

Despite economic uncertainty and post-pandemic shifts, the staffing industry has remained remarkably resilient. Many businesses are turning to flexible staffing solutions to manage fluctuating demand, and that’s where agencies shine.

Verticals like healthcare, IT, logistics, and government staffing are experiencing sustained or increasing demand. Meanwhile, hybrid and remote work models have opened up new sourcing and placement opportunities.

Perhaps most importantly, starting a staffing agency today is more accessible than ever. Thanks to remote-friendly business models, cloud-based technology, and outsourced back-office support, it’s possible to launch lean and scale smart—without the overhead that was once required.Despite economic uncertainty and post-pandemic shifts, the staffing industry has remained remarkably resilient. Many businesses are turning to flexible staffing solutions to manage fluctuating demand, and that’s where agencies shineVerticals like healthcare, IT, logistics, and government staffing are experiencing sustained or increasing demand. Meanwhile, hybrid and remote work models have opened up new sourcing and placement opportunitiePerhaps most importantly, starting a staffing agency today is more accessible than ever. Thanks to remote-friendly business models, cloud-based technology, and outsourced back-office support, it’s possible to launch lean and scale smart—without the overhead that was once required.

How much does it cost to start a staffing agency?

It typically costs anywhere from $3,000 to $250,000 to start a staffing agency. Depending on your location, size, and if you need an office, the costs can vary greatly. It also depends on how much you want to outsource and how fast you want to be up and running.

We tend to see three broad start-up cost categories for most new staffing owners:

DIY, $3-10K

In this category, owners will typically spend a few grand to get their firm up and running. It requires a lot of manual work where they are putting the pieces together on a shoestring budget and not outsourcing a ton.

This is the budget-conscious, bootstrapped model. You handle most aspects yourself—setting up the business, sourcing candidates, creating invoices, and more.

Pros: Very low cost; full control
Cons: Slower to launch; steep learning curve; time-intensive
Best for: Solo founders with staffing experience and limited capital
Timeline: 3–6 months to fully ramp

Hands-On but with Help, $11-34K

In this scenario, new owners are still hands-on in setting up the business, but probably hiring someone to do it properly.

This is a balanced approach. You still manage the business setup and operations but outsource many recruitment back office tasks like payroll processing and invoicing.

Pros: Faster to launch; access to expertise
Cons: Still requires personal involvement
Best for: Founders with mid-level capital and desire for efficiency
Timeline: 2–4 months

Outsource Everything: $35-250K

This is a scenario where a new owner has a decent amount of money to spend and will outsource everything possible in order to set up the business quickly and free up their time to focus on development.

Pros: Fastest path to market; lowest admin burden
Cons: Requires more capital upfront
Best for: Funded operators or serial entrepreneurs
Timeline: As little as 4–8 weeks

The types of costs you will have to take into account are:

Office space/ rent
Equipment and supplies
Insurance
Legal set-up expenses (entity foundation, contracts, etc.)
Website development and set-up
Software solutions such as payroll, HR, training, etc.
Employee and freelancer costs
Advertising and marketing

Recurring vs. One-Time Costs
One-time costs typically include your business formation, website build, and legal setup. Recurring costs include software subscriptions, marketing, insurance, and payroll.

Often Underestimated
We frequently see new owners underestimate insurance premiums, marketing budgets, and the time and cost of training on new software platforms.

Hidden Costs New Owners Often Miss

Even with a solid startup budget, there are a few sneaky costs that catch many new staffing owners off guard:

Subscription Creep: Many new agencies end up with multiple overlapping software tools—keep an eye on what you’re actually using.
Payroll Float: You’ll likely pay temps weekly, but your clients may take 30–60 days to pay.
Job Board Spend: As you scale, so do your job post costs on platforms like Indeed or ZipRecruiter.
Turnover Costs: Retraining and replacing internal or contract workers during the ramp-up phase can add up.

What are the steps I have to take to start a staffing agency?

To start your own staffing agency and have it be successful, there are certain steps you must take. Here are a few:

Determine Your Niche

As there are many types of staffing, the first step to starting your own firm is determining what kind of agency you are starting. Your passion and experience will help you determine this, as well as outside factors like competition and market.

Draft Your Business Plan

This step should not be overlooked – a business plan is your roadmap and is critical to success. A good business plan guides you through each stage of starting and managing your staffing business. We have a free template here as a place to get started.

Download our free Business Plan Template

Take Care of Legalities

Research the state requirements to become a business entity and fill out the proper paperwork. You will need the proper permits and licenses and also various insurances such as workers’ compensation. Note that when filing as an entity, your staffing agency name needs to be unique and descriptive!

Find a Location

If you have a physical location, you will need a good atmosphere in which to interview candidates and hold meetings. You need to consider lease costs and terms, accessibility, and client proximity.

Write Up Contracts and other Documents

A business lawyer will be able to help you draft contracts for the companies that will employ your services. There are also free example contracts online. Other helpful documents to have are employee handbooks, employment agreements, job descriptions, etc.

Raise Capital

IBeyond your start-up costs, you also need to consider unexpected expenses as well as meeting week-to-week payroll while your revenue is tied up in unpaid invoices. Invoice factoring is a common staffing industry service that can help.

Marketing and Advertising

Getting found online and having a great website are both extremely important in the digital age. A strong website should be mobile-first, SEO-optimized, and built to generate leads. Pair it with job boards, social media, paid search, and local outreach. Consider advertising tactics like direct mail, online ads, SEO, social media, and email campaigns. Outsourcing a freelancer or a local agency can help if you don’t have the bandwidth internally.

Building a Lean and Scalable Staffing Model

Start lean by outsourcing non-core tasks such as payroll processing, compliance, and marketing. This allows you to focus on high-impact, revenue-generating activities like business development and recruiting.

Invest early in cloud-based, integrated software so your systems can scale as you grow. Efficient tools today mean fewer growing pains later.

When to Bring in a Financial Partner

You may need outside capital or support when:

You’re experiencing rapid growth
Client payments are delayed
You’re feeling cash flow stress due to payroll obligations

Payroll funding offers a flexible, debt-free alternative to loans. Advance Partners specializes in supporting startups with fast access to working capital and back-office support built for staffing firms.

Request a Consultation

Startup costs don’t need to be overwhelming when you have the right plan and partners in place. With flexible models, smart outsourcing, and financial support, many owners launch lean and scale fast.

Want help? Advance Partners offers tools and guidance to make your launch easier, including:

FAQs: Starting a Staffing Agency

Startup costs typically range from $3,000 to $250,000 depending on how much you outsource, your location, and speed to market.

Legal setup, insurance, payroll float, marketing, and software tools are among the top costs

Yes! Many staffing firms today operate fully remotely with cloud-based tools and virtual interviews.

Most startups do. Payroll funding helps bridge the gap between paying temps and receiving client payments.

You’ll need business registration, client contracts, employee agreements, and appropriate licenses and insurance.

I hope this post helped answer questions you might have about the costs of starting a staffing agency. If you would like to set up a time to speak about payroll financing for your start-up firm and how we can help, please request a consultation. We also have resources like the Business Plan Template, SWOT Analysis template, and Pricing Calculator for start-ups.