Is it time to hire your first employee?
To help you decide, define a potential role by keeping a list of routine daily and weekly tasks. Consider special upcoming projects that require a specific skill set and any work a potential employee could do throughout the week when everything else is finished.
When you have a list that adds up to at least 20 hours per week of ongoing tasks and several planned projects, it may be time to consider hiring your first employee. Here are four steps to help you hire the right person for your business:
- Prepare for the hiring process
- Attract the right applicants
- Identify your top candidates
- Bring your top candidate onboard
1. Prepare for the hiring process
There are a few preparation and housekeeping tasks to consider before starting the hiring process, including your business budget and legal obligations. Consider these steps before posting your job:
Decide what you can afford
Hiring your first employee costs more than just a salary. As an employer, you may be required to pay state payroll taxes, unemployment taxes and workers’ compensation, as well as other expenses such as equipment, workspace and benefits.
Decide whether it makes more sense to hire a full-time, part-time or contract employee. An independent contractor can help with specific projects temporarily with few overhead costs. However, a permanent employee has a stronger sense of company loyalty and long-term commitment to your vision and values.
Handle your legal obligations
Although it may seem intimidating, navigating the legal aspects of hiring a new employee comes down to filling out a few forms and complying with certain regulations.
Here are some steps you should consider when hiring a new full-time employee in the United States:
- Obtain an EIN (Employer Identification Number) from the IRS.
- Sign up for your state’s new hire registration system.
- Obtain paperwork to withhold federal income tax from your new employee’s paycheck.
- Prepare Form I-9 to verify your new hire’s eligibility to work in the United States.
- Find out if you need to purchase workers’ compensation insurance in your state.
- Set up a payroll system.
Related: What Are ER Taxes? A Guide to Employer Taxes
Get ready for your first employee
These final steps help you prepare for a new hire:
- Determine salary and classification. How much will you pay your new employee? Set a competitive salary by researching the average salary range for jobs in your location. Then, choose between exempt and nonexempt under the Fair Labor Standards Act (FLSA).
- Set up employee benefits. Consider establishing an employee benefits package, including health insurance, retirement plans, profit-sharing, parental leave, etc.
- Create an employee handbook. Before making your first hire, develop your company’s policies and procedures, including an employee code of conduct, health and safety policies, dress code, attendance rules, paid time off and more. Here’s an employee handbook template to get you started.
- Start an employee filing system. You’ll need a file for your new employee to keep track of all of their important job documents, records and forms. According to the U.S. Department of Labor, employers are required to keep 12 different records on file for each employee for the length of their employment.
2. Attract the right applicants
Next up is getting the right candidates to apply for your open role—starting with figuring out who you’re looking for and transforming that wish list into a compelling job description.
Imagine your ideal candidate
Before posting your job, write down the characteristics, skills and qualifications you’re looking for in your ideal candidate. These attributes will help you craft a job description that attracts the most suitable applicants. For example, you might imagine your first employee as being a self-starter with a growth mindset. Identifying these qualities early will help you spot the perfect candidate when they’re sitting in front of you.
Create a compelling job description
For small businesses, getting the job posting right is critical for standing out in a crowd of big competitors. Start with an engaging summary of the role and clearly describe what the job entails. To attract candidates who enjoy working at small companies, explain that you’re hiring your first employee and are excited to expand your business.
Find the best talent for your open position by including the following elements in your job description:
- Accurate job title
- Overview of your company
- Key job duties and responsibilities
- Required and preferred skills
- Working conditions (e.g., environment, physical demands, travel requirements)
- Salary or pay range (optional)
- Employee benefits or perks
We’ve compiled job description samples for over 600 jobs to help you attract the most qualified candidates.
3. Identify your top candidates
Once you’ve attracted several applicants to your job posting, it’s time to screen your candidates to determine who should move forward in the hiring process.
Conduct pre-employment screening
Find out which applicants meet your basic requirements and desired skill level by:
- Reviewing resumes and cover letters
- Conducting 15-30 minute phone screens
- Communicating with candidates through email
- Having applicants complete pre-employment tests
Interview promising applicants
During the interview process, ask questions that will reveal if your candidate’s vision aligns with yours, as well as broader questions to learn how they respond in difficult situations, what motivates them and if they can drive business value.
Look for the following qualities and attitudes in your candidate’s answers:
- Flexibility
- Grit and resilience
- Passion
- Culture fit
- Versatility
- Sense of accountability
- Competitive drive
Check out our list of interview questions for over 500 jobs to help you hire for a specific role or skill.
Check your candidate’s references
Calling your top candidates’ references lets you assess their honesty, collaboration skills and ability to do the job. Beyond resumes and interviews, speaking with someone who has worked directly with your candidates will provide you with insights into whether or not they’re the right fit for your company.
Related: Sample Reference Checklist: a Form for Your Business
4. Bring your top candidate onboard
When you’ve narrowed it down to the top candidate, it’s time to offer them the job and welcome them to your business. Here’s how to get things off to the right start:
Send an offer letter
After making a verbal offer to your top candidate, send an official job offer letter. Your offer letter should explain the terms and conditions of employment and include details, such as:
- Job title
- Start date
- Compensation
- Benefits
- Deadline for accepting/declining the offer
- At-will statement
Welcome your new hire to the team
An exceptional onboarding experience sets your new employee up for success in their first days, weeks, months and beyond. It also gives them the tools they need to start making an immediate impact. To help your first hire feel empowered in their new role, consider planning out their first month in detail. Offering specific goals and clear expectations will help you measure their success and give them guidance.
Related: Employee 30-60-90 Day Plan Template
There’s a lot to think about when hiring your first employee—from determining your budget to taking care of your legal obligations and finding and hiring the right person to help grow your business. But by following these steps (and checking with a legal professional), you can make sure you’re covering all your bases in the small business hiring employee process.
The best part is, once you hire your first employee, it’s often a lot easier to hire your second, third, fourth and beyond to build a great team.
Frequently asked questions about hiring your first employee
Who can help me learn how to hire employees?
When figuring out how to hire your first employees, look for business mentors who can help. Ask them about the processes they followed. You can also consult with a business or labor attorney for legal guidance on the hiring process to ensure you’re compliant with all state and federal labor laws.
How can I recruit for my first hire?
Using a variety of recruitment methods and sources for candidates can help you increase the number of applicants you attract. In addition to traditional postings on job sites such as Indeed, you can post on social media, ask your contacts, post in online communities, check with industry professional organizations and collaborate with local colleges.
Why is the timing of your first hire important?
Deciding when to hire your first employee can be difficult. If you hire someone too soon, you might struggle to afford the costs of the employee, and they might not have enough duties to stay busy. Waiting too long could force you to work too many hours, cause stress and slow your growth because you can’t handle it all. Starting with a contract employee can help you decide if you can afford a regular employee and have the workload to justify one.
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