US · Starting
Is a staffing agency the same as a recruitment agency?
How staffing and recruitment differ in employment model, cash flow, funding needs and exit value.
The short answer
They overlap but are not the same business. A staffing agency employs temporary or contract workers, pays them and bills a client an hourly rate. A recruitment agency places permanent hires for a one-off fee. Staffing needs working capital and builds recurring revenue; perm recruitment needs almost none and does not.
In the US, 'staffing' usually implies W-2 temporary and contract labour. In the UK the same activity is called temp or contract recruitment. The vocabulary differs; the economics do not.
The employment relationship drives everything else. Employing the worker means payroll, employer taxes, workers' compensation and classification risk — and it means an hourly spread that recurs for the length of every assignment. Perm placement carries none of that and none of the recurring revenue either.
It also drives valuation. Acquirers pay more for contract books with proven retention than for perm desks dependent on a founder's relationships, which is why many recruitment founders bolt a contract division onto a perm business as they approach an exit.
United States
How this differs by US state and metro
The answer above holds nationally. What changes locally is registration, insurance, wage rules and how much cash each contractor consumes — these are the states and metros founders ask us about most.
Pennsylvania
Philadelphia · Pittsburgh · Allentown
Register with the Department of Revenue for employer withholding, and for local earned income tax where workers live and work
Pennsylvania guideNorth Carolina
Charlotte · Raleigh–Durham · Greensboro
Register with the North Carolina Department of Revenue for withholding
North Carolina guideSouth Carolina
Charleston · Greenville · Columbia
Register with the South Carolina Department of Revenue for withholding
South Carolina guideNew York
New York City · Brooklyn · Long Island
New York City licenses employment agencies through the Department of Consumer and Worker Protection — confirm whether your model falls inside that definition before you place
New York guideMetro-level wage, bill rate and startup cost detail:
Local questions
Does this change if I start in Pennsylvania?
The national answer holds. What changes in Pennsylvania is local: Register with the Department of Revenue for employer withholding, and for local earned income tax where workers live and work Check the Pennsylvania page before you register anything, and model the cash gap on Pennsylvania pay rates rather than national averages.
Is the answer different in North Carolina than in Pennsylvania?
The economics are the same shape; the local detail is not. In North Carolina: Register with the North Carolina Department of Revenue for withholding That affects your registration checklist and your working capital number, not the underlying principle.
Which US cities does this apply to?
All of them — but we publish metro-level bill rate, wage and startup cost detail for New York City, Buffalo, Philadelphia, Pittsburgh and more, because pay rates and buyer mix vary far more between metros than between states.
Do I need a separate licence in every state I place in?
You register where you have employees and where you do business, not once nationally. Most states require unemployment insurance and withholding registration plus workers' compensation cover; a minority licence employment agencies, and some cities — New York City among them — licence separately from the state. Confirm each state and city before your first placement there.
Go deeper
Staffing agency vs recruitment agency: the difference that matters
Staffing agency versus recruitment agency: who employs the worker, how each one earns, the cash each model consumes, and which is the right business to start.
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