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How to Hire Your First Employee

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    Hiring new employees means additional resources and complexity for your business, including new paperwork and management responsibilities. Finding the right employee and building a team can pay off in more ways than one, but the transition from sole proprietorship is a big leap.

    If you don’t have a clear idea of what your first employee will bring to your business, don’t rush into it. Start the hiring process by defining the position with a well-written job description — one meant to attract specialized candidates — and then choose the best fit for the work that needs to be done.

     

    Recruiting

    Once you’ve identified the requirements for your first hire, you’re ready to begin the recruitment process. You can reach out directly to potential employees, or you can post your job opening in local, regional and industry-specific publications. Many employers do both.

     

    Interviewing

    Once you have a stack of resumes, you can review the qualifications of potential employees and choose three or four of the top candidates to interview. When hiring your first employee, your goal is to find a few people with the right education and work experience, and then select the most personalized fit for your business. Remember that some questions are off limits (and often illegal) to ask in an interview. Some off-limits questions pertain to:

    • Age
    • Marital status
    • Religion
    • Race
    • Sexual orientation

    Stick to questions about the applicant’s qualifications, such as their academic and professional experience. If you have questions about legal restrictions when interviewing, visit the U.S. Department of Labor’s information on Equal Employment Opportunity laws and seek professional guidance.

    You’ll also want to give each candidate a chance to talk about intangible things that may make them a good fit for the job. These may include flexibility and attitude toward new responsibilities, challenges and unexpected problems.

    A job interview is also a chance to explain what your business aspires to accomplish. Make sure you touch on why you’re building a team and the benefits of the job. You should also discuss the problems you anticipate as you grow the business. Set expectations and be honest about the workplace environment.

     

    Checking references

    Take the time to do a background check and contact references for every new employee you’re considering. This can be a time-consuming task, but it's crucial when building a team to make sure that each candidate has honestly described their background (especially when hiring your first employee). You don’t want any surprises that could disqualify the person. It may be a good idea to speak with a human resources professional to determine qualifying criteria.

     

    Onboarding

    The first step to bringing on your first employee is to agree on salary and benefits. You must pay minimum wage for your state, but all other salary negotiations are between you and the applicant.

    You will need to properly classify and document each new hire. Full-time employees who work at least 30 hours per week may be eligible for certain benefits. You should also make sure you’re not illegally categorizing your employee as a contractor.

    You’re required by the U.S. Department of Labor to secure several pieces of information on every employee. There is information you should collect during the onboarding process, including:

    • Full name
    • Social Security number
    • Mailing address, including ZIP code
    • Birth date, if the employee is younger than 19
    • Sex
    • Workweek information, including when the week begins, hours worked daily, and total hours worked
    • How often wages are paid (weekly, bi-monthly, etc.)
    • Regular hourly pay rate and total daily or weekly earnings for an average workweek
    • Total overtime earnings for each workweek
    • Additions to or deductions taken from employee’s wages
    • Total wages paid each pay period
    • Date of each payment

    Some of these records relating to paying employees must be updated with each pay period. Check with a human resources professional to ensure you have collected all the relevant information.

     

    Employment and payroll records

    You will also need other documentation, which usually includes an I-9 form that confirms employment eligibility and a W4 form that details withholding.

    Accounting software or payroll management services can store these records for you. While payroll can seem like a daunting task, it’s possible to manage it yourself so long as you keep careful records of what you’re paying employees and calculate withholding properly. Business owners should consider consulting an accounting or employment lawyer to set up the initial withholding formulas, which can then be easily updated for each pay period.

    Once your first employee has been hired, you’ll need to navigate other areas, including payroll management, adding new benefits and assessing performance through ongoing reviews. For help with the other aspects of hiring employees including opening a business bank account, meet with your local business banker.

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