shape shape
Hiring Your First Employee

Register with your state’s labor department for both unemployment insurance and employment taxes

As a new business owner, another must is to check with your state’s labor department to make sure you need a state tax ID number or charter. Most states will require businesses to pay state unemployment compensation taxes. These tax payments are deposited into a fund to provide short-term relief to workers who lose jobs. Visit the Department of Labor website for a list of state unemployment tax agencies at

Get workers’ compensation insurance

Worker’s Compensation Insurance is a very important type of insurance for any business. This type of insurance protects employees who suffer work-related illnesses or injuries by providing benefits to help them recover and return to work. Business owners must note that workers’ compensation insurance differs from health or general liability insurance. Several insurance companies offer workers’ compensation insurance, and quotes can be easily obtained online. But before you buy a policy, knowing how much coverage you will need is essential. Some factors to consider are state laws, how many individuals you employ, what type of work you’re employees are participating in, and what kind of employees you have, such as contract employees or independent contractors. Most states require this type of insurance. However, some states make exceptions for small business owners with fewer employees.

Payroll system

Once you have your EIN, registered with your state tax department, and secured workers comp. Another essential component when hiring employees is your payroll process and system. Whether outsourcing or processing in-house with payroll software, it’s important to ensure that you have all of your bases covered, from employee classifications to the different types of pay to the employee handbook and pay schedule. Consider consulting with a labor attorney or accountant to ensure you comply with state, federal, and industry requirements. Let’s break down your options into smaller bite-size pieces.

  • Employee Classification – As an employer, you must correctly classify your employees. Not only to guarantee your employees are being paid correctly but also to protect the business from having to pay back any unemployment taxes for misclassified workers. Will you be employing contract employees or independent contractors? If you need more clarification, the IRS offers a guide to help classify employees. By filling out a form on their website, the IRS can help make that determination to ensure you’re filing the correct paperwork and deducting the appropriate taxes.
  • Different Types of Pay – Understanding the differences between the different types of payment will help business owners to ensure that they are calculating the correct employee wages, including but not limited to their general wages, overtime, sick or vacation time, bonuses, and commission or production if applicable.
  • Pay Schedule – Depending on your business type and your cash flow, you may choose to pay weekly, biweekly, semimonthly, or monthly. The most common of these schedules is biweekly. However, considerations should be made for special payrolls such as holiday or seasonal bonus pays.
  • Employee Handbook – This may be a little out of place when discussing pay structure, but remember that the employee handbook is the platform to communicate your company’s culture, expectations, and policies. A practical employee handbook should include information about paid time off (PTO), overtime (OT), and other types of non-mandatory leave.

Prepare for the hiring process

Whether you are a small business owner with only a handful of employees or an employer with a large staff, the process you put in place for recruiting and hiring new talent should be well thought out and structured. Because every business is unique, tailoring your hiring process to your budget and specific company needs is vital. Read on for some tips and tricks on streamlining your hiring process.

Setting a budget

Setting a budget can seem intimidating, especially if you’re a new small business owner. After all, it often entails more than just your employee’s wages. But it can be easy if you have the right approach. When creating your budget, include wages, state payroll tax, unemployment taxes, workers’ compensation taxes, employee benefits, and equipment.

Legal Requirements

There are several steps that all businesses must take to ensure that they are a compliant and lawful employer. At this point, we’ve covered several, but here are a few more worth mentioning.

  • If applicable, you’ll need to withhold the appropriate deductions from each employee’s income for federal, state, and local taxes, employee benefits, and wage garnishments.
  • The standard operating procedure for onboarding all new employees should include creating employee files for each employee and completing I-9 verification to ensure your new employee is eligible to work in the United States.
  • Each new hire must complete the W-4 form to tell you how many allowances they claim for tax purposes. You do not need to submit this form to the IRS. However, you can obtain a copy of the form on the IRS website.
  • Post the required notices. Several state and federal laws require employers to post important notifications to employees detailing their rights under the law. For more information or to download the necessary posters, visit the Department of Labor website at
  • Comply with OSHA requirements. OSHA or The Occupational Safety and Health Administration rules and regulations cover a variety of workplace safety conditions. Consider setting up OSHA safety training during the onboarding to ensure that your company provides a safe, hazard-free workplace and proper employee safety training. For more information on the specific requirements, visit their website at

Attract the right applicants

Finding the perfect candidate to join your team can be challenging. With so many job opportunities available, potential applicants can be highly discerning. Giving particular thought to your hiring process and developing a solid brand will help you to attract the best talent for your growing business.

What does your ideal candidate look like?

Asking yourself the right questions will help you to recruit the best applicants. But how do you know what questions to ask?

  • Be strategic and target questions to the specific tasks associated with the position.
  • Have an edge over your competitors by creating a streamlined hiring process. This reinforces those high-performing job seekers in such high demand that you value them and their time.
  • Be in constant contact with suitable candidates. If they are an excellent fit for your company, someone else will share your thoughts. Don’t let them beat you to the punch.

Create a compelling job description

Posting an effective job ad begins with creating a compelling job description. According to an Indeed survey, employers’ #1 hiring challenge is getting too many applications from underqualified candidates. Over half of those surveyed revised their job descriptions as a result. Create a specific job title and be concise when providing a job summary. Some other considerations include being truthful about what the job entails, avoiding abbreviations, including a mix of hard and soft skills, and focusing on growth and opportunity.

Identify your top candidates

Ask yourself what you value as a job seeker, and consider what your ideal candidate may find most appealing by working for your company. Additionally, it’s essential to consider precisely what you are looking for in a candidate.

Conduct pre-employment screening

Pre-employment screenings, or background checks, have become increasingly popular for employers to verify applicants’ information and confirm work history. There are several different types of screenings for new businesses to consider. Here are just a few:

  • Criminal history screening
  • Credentials and employment verification screening
  • Controlled substance screening
  • Public records screening

Interview top applicants

Coordinate a round of interviews to ensure you’re hiring the right candidate. Here are some tips for interviewing your top candidates:

  • Be prepared with the job description and a list of questions you want to ask.
  • Review the candidate’s resumes before sitting down with them.
  • Understand and articulate your company’s culture and goals.
  • Take notes of each candidate’s answers or jot down specific details worth revisiting.
  • Show you care and ask about short-term goals.
  • Keep all interviews structured and ask the same questions for each candidate applying for the same position.
  • Allow them to ask questions.
  • Set appropriate expectations and provide the candidate with the next steps.

Check references

Although only some hiring managers will initiate a reference check, it’s an important step in the hiring process, and its importance should be noticed. A reference check will provide you with the peace of mind that you’re making the right choice for your business and will also help you gain a fuller insight into your prospective new hire.

Bring your top candidate through onboarding

Offer letters

An offer letter is not required by law. However, if you choose to provide an offer letter to new hires, ensure that it’s properly written to avoid entering into a legally binding contract inadvertently. A formal offer letter includes information about the company, the employee’s role, salary, benefits and perks, and a payroll schedule.

Welcome your new hire to the team

Congratulations! You’ve found the best candidate, and they’ve accepted your job offer. Good employee onboarding has been proven to increase productivity and retention. Here are a few things to consider when developing the onboarding process for your small business:

  • Provide your new hire with important information they will need to know for their first days, weeks, and months. This may include a copy of the employee handbook, their training schedule, assigning them to a mentor or “work buddy,”
  • Clearly state the start date and share a copy of their work schedule and where they can find it.
  • Introduce them to the team! Send an email announcing their arrival or schedule a staff meeting with a catered breakfast or lunch to make introductions.
  • Consider giving them a swag bag.
  • Incorporate a welcome message to your new employee.Hiring Your First Employee