How to start a recruitment agency in the UK

Updated 2026-07-03 • Last reviewed 2026-07-12

The quick answer: most people running a recruitment agency in the UK start as a limited company. Startup costs are moderate, recruitment software and compliance admin add up faster than people expect. Registration can be entirely free, and the details below cover exactly what to sort, and in what order.

Step 1: Choose your business structure

Most people starting a recruitment agency go with a limited company. Don’t default to a limited company just because it sounds more serious, at modest income a sole trader is often simpler and cheaper once accountancy costs are factored in. Read our complete sole trader vs limited company guide and run your own numbers on the calculator before deciding.

Step 2: Register your business

Sole traders register directly with HMRC. If you’re incorporating, several providers, Tide, ANNA, Revolut and Wise, will register your limited company for free when you open a business account with them, saving you the Companies House filing fee and a separate step. See our full registration guide for the complete walkthrough, including what to have ready before you start.

Step 3: Licences and permissions

A recruitment agency in the UK typically needs to consider:

• Compliance with Employment Agency Standards regulations (not a licence, but a legal obligation)

Step 4: Open a business bank account

Keep business money separate from personal spending from your very first transaction. Several genuinely free accounts exist, so cost is never a good reason to skip this. See our best business bank accounts guide to find the one that actually fits how you’ll use it.

Step 5: Sort your accounting

Set up bookkeeping before your first invoice lands, not three months in once receipts have piled up. A genuinely free tool like Wave covers the basics well for a new, small business, with paid options like Xero or QuickBooks worth considering once things get more complex.

Step 6: Get the right insurance

For a recruitment agency, the cover that actually matters is:

• Professional indemnity insurance

What actually goes wrong

Two risks dominate here: placing a candidate who turns out to be unsuitable, and mishandling candidate data. Both carry real financial and reputational consequences, and both are worth building proper process around from the first placement, not after a complaint.

Your first 90 days

Registration and setup are the easy part. The real test is the first 90 days: getting your first client or job, keeping accurate records from day one, and not letting admin become a way of delaying the actual work. Our UK startup checklist walks through exactly what to prioritise, week by week.

Related reading: Sole trader vs limited company

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