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

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.

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.

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.

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.

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.

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.

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.

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.