9/30/2021Small Business Advice
Small business guide to hiring your first employee
Are you planning on hiring your first employee for your small business? A lot is required before starting on hiring employees for your business.
Head of Growth
Are you planning on hiring your first employee for your small business? A lot is required before starting on hiring employees for your business. Hiring your first employee is a big step and, as such, requires thorough research.
As it stands, it costs about $4,000 on average to hire a new employee, so please read on to avoid making a bad investment and being a statistic among the 62% of small businesses that admit they made a wrong hiring decision.
Before you jump into the legal technicalities, you need to take care of a few things. First, ensure that your business has fulfilled all legal requirements before hiring your first employee. Make sure that your business is properly registered with local/state governments, and you will also need to obtain an EIN (Employer Identification Number) from the IRS. In addition you’ll need to make sure that you fill in both a Form W-4 and Form W-2 for any new team member you hire as well as any relevant state forms and note any withholding requirements.
Avoid hiring an employee just because you feel temporarily overwhelmed, and consider the time that will be required to find and train a new employee. If you don't already have a hiring manager or human resources department, the process to find and train the best candidates can be highly time-consuming. Next, ensure you can afford the ongoing costs of hiring since hiring an employee may actually cost more than just their salary.
Moreover, do you need a temporary or permanent position? You should note that hiring a full-time employee will be an ongoing cost for your small business and you may be able to outsource specific tasks to an independent contractor instead.
Make sure you are clear about the type of employee you want for the job at hand. In your job posting, specify the skills they need and the amount of money you are willing to compensate them for upfront to save yourself some time. Ensure you keep accurate records of each candidate throughout the entire hiring process as you may need to refer to these records when settling on a candidate. It is also essential to lay down clear company values and hire employees based on these values as the first employees you hire will dictate the company’s culture.
When hiring top talent, you want to go all-in and ensure you get the best. As such, you need to create an attractive employee value proposition, especially if you spot a highly talented job candidate. This of course means being able to offer competitive compensation, but many employees also appreciate perks such as flexible working hours, paid time off, work from home days, etc.
It may come as a shock, but it’s certainly possible for someone to include false information on their job application or exaggerate their skillset. If you mistakenly hire someone who is either underqualified or not a team player, it may cost your business a significant amount of money and set back your goals. In order to avoid this it’s essential to carry out diligent background checks when hiring an employee. This includes doing research on their prior jobs and calling their references in order to verify the legitimacy of their claims. Someone may be great and friendly during the interview process, but be a nightmare to actually work with.
Ensure you ask your applicant for at least three references before making formal job offers. At least one reference should comfortably vouch for the applicant's character, and at least two should be professional. Then reach out to the references personally and hear what they have to say about the applicants.
When contacting the references, ensure you ask objective questions. In addition, if contacting the professional references, ensure they relate directly to the applicant's job performance and duties. If contacting personal references, find out how long they have known the applicant and inquire about the applicant's character and work ethic.
As previously stated, avoid relying purely on your instincts and what you see on the applicant's resume and cover letter. Even though the applicant's resume lists impressive qualifications, capabilities, and signs of top talent, that doesn't guarantee that they can handle your business' unique needs. Make sure to ask any prospective employee questions about their skills and how they would handle real life situations that may come up on the job. Be as specific as possible when asking these questions and take note of how confident the candidate sounds with their answers. Doing so will ensure you end up choosing qualified candidates for the role. Also note that some questions, particularly those concerning personal details, are off-limits. Refer to the site for the US Department of Labor for more details.
It is almost impossible to land an all-around perfect employee, especially when first starting off. The alternative is to hire employees based on their soft skills and then mold them into the perfect employee for the job. Identify the areas that you are best suited to train someone in and that are the easiest for an employee to improve in over time. Training and modeling recruits into model employees requires heavy investment but is definitely worth the effort in the long run.
Make sure you have the right workers' compensation insurance for your state. A few states such as New York, California, Rhode Island, and New Jersey require employers to pay disabled workers who suffer an injury outside of their workplace. Ensure you purchase disability or loss of income insurance for your employee and yourself.
Currently, millions of undocumented immigrants reside in America, a good number of which are a part of the American workforce. Therefore, if you are petitioning a non-American to work for you here, ensure you verify and submit the relevant documents proving their eligibility to work in America. Ensure you also file an I-140 form on their behalf to avoid criminal and civil penalties and audits to your payroll. You must also attach a Form I-9 (Employment Authorization Document) with the I-140 form, also known as the Immigrant Petition for Alien Worker) when submitting to the US Citizenship and Immigration Service (USCIS).
Depending on the role of your first employee, there may be other forms to fill out. Ensuring employment eligibility is crucial for avoiding penalties, so contact the USCIS or an immigration lawyer to help with these processes as part of fulfilling your legal obligations.
Large and small business owners need to be aware of federal taxes, payroll taxes and withholding rules, and state taxes. Some of the applicable rules and tax forms include:
A payroll is not as simple as cutting a check. It is vital to ensure you provide your workers with their pay timely and comply with the law. Reach out to a payroll provider to help you set up a payroll and automate the process to reduce paperwork.
Hiring your first employee for your small business is a vital process. It plays a huge role in your organization's future success and outlines what your company’s culture will be and as such, you need to invest a lot in ensuring a seamless and fruitful hiring process. Remember that your employees are people too, and if you provide them with a great environment to learn and grow they’ll be much more likely to fuel the success of your business.