Hiring Your First Employee in a Small Business

4 min read · 7 years ago


Starting and growing a small business is an exciting, yet hectic time. Especially if you’re a do-it-yourselfer. However,  eventually you’ll hit a tipping point at which time you can’t grow without an extra pair of hands. Hiring an employee frees up your time to expand your business, while still getting all the business building activities done.  At the same time, because it’s a financial commitment, you want to make sure you’re ready and prepared before taking on an employee.

1) Make sure you’re financially ready. While you may be long past time that you need extra help, before you hire, you make sure you’re financially prepared to sustain the expense of having an employee. That includes being able to pay the wage or salary and other expenses related to having an employee.

2) Create a space for your new hire. The type of space an employee needs depends on the type of business you have. Your employee may need an office or a desk. If you have a retail establishment, your employee many not need his own space, but he still needs a place to take a break, such as lunch room or lounge. Many small businesses are going the virtual route, hiring employees that work from home or other locations. If that is the case, you’ll want to make sure your hires have space at their location to do the work.

3) Outline the details of the position and what is required. Ideally, you should create a job description that lists duties and expectations. Further, you should know how many hours a week the employee will work, the wage you’ll pay and any other perks you’ll offer, such as benefits and paid leave.

4) Research and prepare for the legal issues related to hiring an employee. Have you obtained and EIN (employer identification number) from the IRS? Are prepared to withhold and pay income, Social Security, Medicare and unemployment taxes on the wages you pay your employee? Further, are you familiar with hiring laws such as the anti-discrimination laws?

5) Advertise for an employee. Be clear in the post the duties and expectations of the job, as well as the requirements of the candidate and instructions for applying. If you have many applicants, you can easily weed out those who don’t have all the requirements or who fail to follow the directions for applying.

6) Interview candidates. You can get a list of interview questions online, but always be clear on why you’re asking a question. Your goal is to find someone with skills and experience, but also who is a good fit with you and your business.

7) Do background checks. Contacting former employers or references can help you determine if a person is a good fit and risk. It won’t hurt to get criminal history background check as well. You’ll also want to make sure the person is eligible to work in the United States (or wherever your business is located).

8) Complete required paperwork. You’ll need to ask your employee to complete a W-2. Obtain worker’s compensation insurance and register your new hire with your state’s New Hire Reporting Center.

9) Create an employee manual as a reference for your new employee. You’re employee will need training to do things the way you prefer and time to acclimate to the work. In the beginning with your first hire, the two of you will need to learn what works best. Keep track of the methods that work best in helping your employee understand the job and systems related to the job in the manual so if your employee moves on, it will be easier for the next employee to learn the ropes.