How to Start HR Consultancy Business in India

Every business and every industry need a skilled employee force. But, it is not possible for a business to go looking for the right candidate from a huge pool of job-seeking candidates. This is especially true in a country like India where demand for jobs is more than the supply. This is where an HR consultancy comes in. An HR consultancy business connects employers with potential employees. Their primary task is to create a talent pool of candidates and match them with the employment needs of a company or industry.

With employers in constant search of talent, an HR consultancy business has great potential to succeed. However, it is not as easy as it sounds. You need hard work, a lot of searching, and most important of all, a lot of patience. Below is a complete guide along with some useful tips for a successful consulting business.

Related: How to Start an Ecommerce Business in India

Tips for a Successful HR Consultancy Business

Starting everything from scratch can be quite a challenge. The best strategy is to go slow but steady. The following tips will help you ease your way into the consulting and recruiting industry.

Build a database

Your primary job is to help employers find the right candidate. Now, this is possible only if you have a pool of candidate profile and information. So, the first step is to gather basic candidate information from all possible resources. Sources include online job portals like Naukri.com and Shine.com as well as social platforms like LinkedIn. It is important to be ready with a concrete pool of basic candidate information when a client approaches you, looking to hire for their business.

Foster client relationships

Your business will sustain on client relationships. Therefore, it is important to display utmost sincerity towards fulfilling deadlines and commitments. This will go a long way towards creating a lasting reputation.

Get a website

In the online world of today, it is not possible for a business to thrive without a good website. Invest in building a website with a user-friendly interface and all relevant information.

Related: How NRIs Can Set up Business in India?

How to Start an HR Consultancy?

Following business tips is one thing and setting up a business another. To start a business, you need to follow all legal formalities related to it. A PAN Card, as well as a Current Bank Account in the name of business, are the most basic requirements. Apart from this, you need to complete many others.

The step-by-step guide below tells you how to do that.

Decide a name

What’s in a name? A lot if you want to run a business based on client relationships. Names like Best Consultancy, Decent Employment etc are a strict NO NO. Not only it sounds clichedit also shows that not much thought has gone into naming the business. This, in turn indicates how serious you are about the business.

So, engage into some brainstorming to arrive at a simple, yet a unique name for your business. The first benefit of doing this is discussed above. Another great benefit is that a unique name will increase the chances of getting a Trademark Registration. It’s a win-win situation, whichever way you look at it.

Figure out the business type

After the business name comes the business type. You can choose one of the following forms of business:

There is no formal registration for Proprietorship Firm. You are required to take the registrations like GST registration, Shops & Commercial Establishment registration to open a current account in a bank in the business or trade name.

Due to huge legal responsibility involved, it is a safer choice to operate with limited liability. Therefore, sole-proprietorship and partnership would not be a wise choice. For an HR consultancy OPC, LLP and Pvt. Ltd. Company forms of business are a more suitable choice.

You need to register a Pvt. Ltd. Company, an LLP  and an OPC on the MCA website. Please note that registration is compulsory for all the three.

Related: Registration Process: 6 Steps to Incorporate a Private Limited Company

Check the name

Once you decide the name and the business type, it is time to register them both. You can check if the name is available or not using the MCA website. You can check both LLP and Company names on the same website.

Get IP protection

This is an important step for almost every business these days. Your domain name and business name are both subjects of Trademark. You can get a Copyright as well a Trademark for your business logo. Moreover, you can also Copyright the software for you Website as well as its content and other material on it.

Devise a revenue model

Different employers have different policies. Some prefer to pay a one time amount for each hired candidate. On the other hand, some others prefer to pay a fixed amount every month, irrespective of the number of hired candidates. There is another form of arrangement where the recruiting agency charges a fixed commission from the employee salary every month. You can arrive at a plan that suits you the most, keeping in mind your needs and preferences.

Know your contracts

You act as the mediator between the employer and the employee. This makes you responsible towards both. Moreover, if you hire employees on your payroll, you need a dual set of contracts. One with the employer and one with the employee. This means double the usual responsibility. Therefore, you need watertight contracts without any loopholes; detailing all terms and conditions in a clear and firm manner.

Related: Employment Bonds in India: What Does the Law Say?

GST registration

HR Consultancy is a service based business. So, it is mandatory for the intrastate service providers to take Goods and Service Tax registration (GST) as soon as your turnover exceeds Rs. 20 Lakhs per annum. It means if you are providing services within the state you are exempted to take GST registrations till the time your turnover exceeds Rs. 20 Lakhs in a year. Once exceeded the limit, you may need to start charging and paying GST at the applicable rates.

If you are providing or planning to provide HR Consultancy services outside the state, you will need to register under the Goods and Services Tax (GST) even if the turnover is below Rs 20 lakh.

ESI and EPF registration

Your agreement with the client may be of two types. The first type is where you hire candidates as your employees and send them further to the ultimate employer. In the second case, you only act as a connecting medium and your client will be the employer.

In case of the first arrangement, you need to get ESI registration if you employ more than 10 persons (20 in some cases). Moreover, it only covers employees with a maximum salary of Rs. 21,000.

In the second case, your client will need to get ESI registration and not you.

In the same manner, you also need an EPF registration in the first case. It is now possible to complete the entire process online.

Related: What to do if Your Employer doesn’t Pay You the Salary?

MEA registration

You must register with the ministry of External Affairs if you want to recruit Indian citizens for employment in another country. You can do so by filling the prescribed form and providing the required documents. The fee is Rs. 25,000 for a period of five years. You also need to deposit a Bank Guarantee (BG) of Rs. 50 Lakh. When you fill the form, make sure that you follow all the guidelines.

If you are doing the above business, then this registration is compulsory and not optional. This condition can be found in Section 10 of the Emigration Act, 1983.

So, this is what you need to know about starting an HR Consultancy in India. It takes a lot of commitment and hard work to run this business. But, once you are able to set it up successfully, it is a rewarding business in the long term.

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