Top 10 Compliance to plan for before starting a Recruitment Agency
If you are reading this, then you are on the right track to get that dream HR Consultancy business kick off. The industry could be a fight, but with some domain knowledge, you could go to places. Starting your thought process from a compliance point of view. If you are first time entrepreneur, then spending reasonable time planning for these is considered a must. We will be looking into the Top 10 Compliance to plan for before starting a Recruitment Agency.
Required Compliance work
1. Register your Business:There are various entity options for registering your consultancy as a business:
- Sole Proprietorship
- Partnership Firm
- One Person Company
- Limited Liability Partnership
- Private Limited Company
Details on this one can be found here.
2. Registering for Goods and Services Tax:
It is a must for your business to be registered for Goods & Services Tax. The current GST rate for manpower recruitment services is 18% (not covered under RCM under GST) and if the business turnover is more than 20 lakhs one has to register GST. The good part is, it can be done by business owners online and the process is simple.
3. Registering with the Ministry of Overseas Indian Affairs:
Definitely required if your business is helping Indian individuals for overseas employment. The application of becoming a Recruiting Agent must be submitted to the concerned office of the Ministry of Overseas Indian Affairs in the prescribed format along with supporting documents. Specifically, the agents which have been registered with the above can recruit Indian Citizens for employment abroad as per The Emigration Act, 1983. The application for registration is accompanied by a fee of Rs. 25,000 and a guarantee deposit worth Rs. 50 lakhs in a bank.
4. Business banking Account:
To carry out any transactions you would be requiring a business bank account. Based on the entity type you choose to register your business, different documents will be required to submit as proof. This account will be essentially a one-stop financial reference for your business operations and as well for the government.
5. ESI & EPF Registrations:
As your consultancy will be involved with hiring candidates and helping the employers getting the suitable pick, Employee Provident Fund and Employees’ State Insurance registration is mandatory. ESI provides medical insurance and security for the person insured as well as for the members of his family. If your company has at least 10 employees at the time of registration, this shouldn’t be missed at any cost for the well being of your employees. All you would be needing is quick registrations for obtaining EPF and ESIC Code No for the establishment of your recruitment agency.
6. Maintenance of employee registers:
The placement agencies shall maintain the records of all the domestic workers and other workers or employees being contracted by them for purposes of employment The record shall consist of the following
- Name and address of the employer under whom such domestic worker or employee is working.
- The period of employment
- The rate of wages and the mode of payment of the wages.
- Displacement allowance payable.
- Passport size photograph of the employer and the worker.
- Nature of work and the working hours.
- Copy of contract
7. Payroll Processing :
- Endeavor to ensure proper reception of the emigrant by the employer in the country of employment.
- Should maintain proper books of accounts, Memorandum of association, Rules, Bye-Laws as the case may be and the details of the office bearers of the organization and details of persons employed by agency
- Payroll processing and Quarterly Vendor Audits of the Contractors
- Preparation & submission of quarterly, half yearly, annual returns, and accounts.
8. Taking care of work ethics and Labour Laws:
- Necessary and timely inspections to be done with the Assistant Inspector of Labour
- Making sure whether the work-seeker is or will be employed by the employment business under a contract of service or apprenticeship, or a contract for services, and in either case, the terms and conditions of employment of the work-seeker which apply, or will apply;
- Proper contracts stating the length of notice of termination which the work-seeker will be required to give, and which he will be entitled to receive from in respect of particular assignments with hirers
- Paying special attention to offer letters, having mentioned the rate of remuneration payable to the job-aspirant; details of the intervals at which remuneration will be paid and other amenities
- If an agency knowingly sends, directs or takes any girl or woman to any place for immoral purposes or to a place where she is likely to be morally corrupted, legal actions will be taken in that case.
9. Paying attention to ITR fillings:
- Punishment of imprisonment for not less than six months and which may extend up to a period of seven years or fine up to 50000 rupees or both shall be given to any licensee who:
- Charges or receives himself or through another person, for his services, any sum greater than the prescribed fee
- Fail to maintain records and accounts of the workers placed by the agency
10. Agreements and Contracts:
There are various instances where the business is put to deal with the third parties. To give you an instance, say you have developed the platform to carry out the business on when you plan to license the same for client usage, Software license agreement would be required. On a similar note, there are a couple of other agreements that will be required, to list a few:
- Vendor Agreement
- Cofounder’s Agreement
- Trademark License Agreement
- Terms of service
Getting a helping hand before taking a jump into the legal formalities will not only save your time but will also ensure mental peace. Wazzeer helps professionals like you to start a business smoothly -> Get Started!