Business Entity Formation & Corporate Governance3 min readUpdated September 2026

Bizee vs. Doola for Recruiters: Staffing vs. Placement Entities

The single biggest decision in this business happens before you ever think about Bizee or Doola: are you running a staffing model, where your entity actually employs the workers you place, or a pure recruiting model, where you collect a placement fee and the client becomes the employer of record. Those two businesses carry entirely different liability and compliance profiles, even though both get called a recruiting agency.

Bizee and Doola both handle standard LLC formation either way. Bizee is the cheaper, faster route for a US-based firm that's already settled which model it's running. Doola adds bookkeeping and non-resident EIN support, useful for a distributed or international sourcing team.

Vendors Covered in this Article

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Staffing model: you're the employer, with everything that implies

If your firm places temporary or contract workers on your own payroll, you're taking on workers' compensation insurance obligations, payroll tax accounts, and unemployment insurance registration in every state where you have placed workers, not just your home state. Many staffing firms partner with a PEO to handle this multi-state payroll burden rather than building it in-house, since the compliance overhead of registering as an employer in a dozen states is substantial for a small firm. Confirm which states actually require registration before you place your first worker there, since the rules aren't identical across all fifty.

Placement model: lighter liability, different risks

A contingency or retained search firm that only collects a placement fee once a candidate is hired, with the client as the employer, avoids most of the payroll and workers' comp burden entirely. The real risk here shifts to candidate confidentiality, client non-circumvention (a client hiring a candidate you introduced without paying the fee), and non-solicit clauses in your client agreements. Get those terms explicit in every client contract, since a handshake placement fee agreement is hard to enforce after the fact. Put the exact fee percentage and the introduction window in writing every time, not just for your larger accounts.

Bizee for a firm that's settled on its model

If you're US-based and clear on whether you're running staffing or placement-only, and you're comfortable handling your own compliance calendar, Bizee's flat filing fee and first-year included registered agent get the LLC formed at the lowest cost. Multi-state payroll registration, if you're in the staffing model, is a separate project you'll still need to tackle.

Doola for an international sourcing team

Recruiting firms increasingly use sourcers and researchers based outside the US to build candidate pipelines for domestic roles. If a cofounder or key team member fits that pattern, Doola's EIN filing as a third-party designee skips the Social Security number requirement, and the bundled bookkeeping is useful if nobody on the founding team wants to own US tax filing directly.

Foreign qualification once your placed workers cross state lines

In the staffing model specifically, having employees physically working in a state, even one placed worker, typically requires your LLC to register as a foreign entity in that state, not just remote clients who happen to be based there. This is a common compliance gap for staffing firms that grow into new states one placement at a time without realizing each new state may trigger its own registration and payroll tax obligation.

What the pay data says about your placement fees

Operations managers, directors, and executives earn a wide range nationally, and about 10.2% of new business applications convert into an actual employer business within a year1, a reminder that most staffing and recruiting firms stay lean by design rather than scaling headcount quickly. Price your placement fees or markup against the real cost of sourcing, screening, and, in the staffing model, carrying payroll risk, not just against what a competitor charges.

A worked example: the fee dispute that ends up in a demand letter

Say your firm introduces a candidate, the client goes quiet for three months, then hires that exact candidate directly without telling you. Without a clear non-circumvention clause and a documented introduction date, proving your firm is owed the placement fee becomes a matter of he-said-she-said rather than a straightforward contract claim. Keep a simple, timestamped log of every candidate introduction, resume sent, and interview scheduled for each client relationship. It costs a few minutes per placement and it's the evidence that turns a fee dispute into a quick resolution instead of a drawn-out collections problem.

What tips the scale

State filing fees average $132 nationally2, a small cost against the compliance work of multi-state payroll if you're in the staffing model. If you're US-based and have already settled your business model, Bizee's simpler entry package may be enough, but compare current filing times and pricing with Doola. If you're building an international sourcing team, Doola's bundle is worth the added cost.

Settle these points before you choose a formation service:

  • Decide first whether you run a staffing model, where you employ placed workers, or a placement-only model where the client is the employer.
  • In the staffing model, plan for workers' compensation, payroll tax accounts, and unemployment registration in every state where placed workers work, or use a PEO.
  • In the placement model, put a non-circumvention clause and a documented introduction date in every client contract.
  • Register as a foreign entity in each state where a placed worker physically works, not only in your home state.
  • Pick Bizee for a US-based firm with a settled model, or Doola if your sourcing team is international.
Executive Capability Standard

What Good Looks Like

Good entity setup for a recruiting or staffing firm means the business model, staffing versus placement-only, is settled first, since it determines whether multi-state payroll registration and workers' comp obligations even apply.

Building The Capability (5-Stage Skill Ladder)

1. Learn:Learn the liability difference between the staffing model and the placement-fee model before you decide which one your firm runs.
2. Do Manually:File the LLC yourself through your state's Secretary of State site once your business model and home-state compliance needs are clear.
3. Delegate:Hand multi-state payroll and workers' compensation compliance to a PEO if you're in the staffing model and placing workers in more than a couple of states.
4. Automate:Automate non-circumvention tracking so a client hire of a candidate you introduced doesn't quietly slip past your placement fee.
5. Buy:Buy a properly drafted client agreement with non-circumvention and confidentiality language before your first placement, not after a dispute.

How to Get Started

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Frequently Asked Questions

Do I need workers' compensation insurance if I only place candidates for a fee?

Generally no, if the client becomes the employer of record and you're never the placed worker's employer. Workers' compensation obligations apply specifically to the staffing model, where your firm employs the worker on its own payroll.

What's a non-circumvention clause and why does my client contract need one?

It's a clause preventing a client from directly hiring a candidate you introduced without paying your placement fee, typically for a defined period after the introduction. Without it, a client can sidestep the fee simply by waiting a few months before making an offer.

Do I need to register in every state where I place temp workers?

In the staffing model, generally yes: having employees physically working in a state usually triggers foreign qualification and payroll tax registration requirements there, separate from your home-state entity filing.

Is a PEO worth it for a small staffing firm?

Often yes, since a PEO absorbs the multi-state payroll tax, workers' compensation, and benefits administration burden that would otherwise require registering as an employer in every state where you place workers.

Sources

Where we quote a benchmark, we show its source. Other figures in this guide are estimates or general guidance, so check them against your own numbers.

  1. Share of business applications that become employer businesses within 4 quarters (average since 2005). Finder.com analysis of US Census Bureau Business Formation Statistics, 2005-2025.
  2. One-time LLC state filing fee across all 50 states + DC. LLC University - LLC filing fees by state (updated June 10, 2026), 2026.

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