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As technological innovation is changing business models, it is also forcing companies to rethink their talent and workforce needs. In the world of recruitment, there are generally two types of recruiters: Internal and external. Internal recruiters work for a company in the human resource department, recruit exclusively for that organization and earn a set salary. External recruiters are independent recruiters who work for themselves or a recruiting firm  help several organizations fill their open positions. External recruiters are similar to some commissioned sales people — there is no limit to the amount of money they can make. 

Many external recruiters, who are also referred to as executive search firms or “head hunters” can make high-income placing white-collar professionals such as executives and physicians in high paying jobs. They charge a percentage of a candidate’s first year’s annual salary and bonus as their fee. The fee can range from 15% to 30%. If a recruiter places a Neurosurgery Senior Advisor who earns $240,000 a year, and the recruiter gets a 25% fee, compensation for this placement would be $60,000, according to Top Echelon.  A recruiter who places a Vice President of Community and Growth who will earn $345,000 will make $64,687 with an 18.75% placement fee.  

Recruiters don’t necessarily need an HR background, but success does require several soft skills such as networking, being able to build relationships and being open-minded, according to Workable. Experience in sales, design, marketing, customer service can also foster good recruiting skills. Recruiting is a competitive industry and one trait that’s helpful is having a competitive drive, according to ZipRecruiter.

The booming job market makes this a great time to pursue  a career in recruitment. Executive search firms and recruiters at small boutique firms are earning high income, particularly if they specialize. Increasingly recruiters are focusing narrowly on the fields they know, where they came from and continue to have contacts.

With high income comes high taxes but independent recruiters can save big on taxes and accumulate wealth with a Defined Benefit retirement plan.

We set up a Defined Benefit and a 401(k) plan for a former broker couple who recruit financial advisors for their former big brokerage firm. Based on W-2 compensation of $275,000 each from their S-corp., this married couple who are in their 60s can contribute and deduct $520,000 a year.

Are you a successful independent recruiter and interested in saving on taxes? Run a free online estimate on our Defined Benefit calculator to see how much you can save.