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Hiring Your First Employee

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Congratulations on starting your own business. You’ve managed to be the boss, human resources department, and janitor ― you’ve managed it all. Your business has grown tremendously, and now it’s time to add some reliable staff aboard your tight ship.

Before you add anyone to your team, you need to understand how to select appropriate employees, the pros and cons of hiring an employee, and the legal obligations involved. Check out this list of three things to consider when hiring a new employee.

Understand the Laws

Legalities start with the hiring process. Be mindful of important federal laws like Title VII of the Civil Rights Act of 1964 that cover discrimination or harassment on the basis of race.

There are specific tax laws that require you to classify your employee as an independent contractor, common law employee, statutory employee, or statutory non-employee. Before any new employee clocks a single hour of work, you must make sure your records are complete. According to the U.S. Department of Labor, there are 14 records that every employer must keep on their employees. These records include total overtime earnings for the workweek and total wages paid each pay period. Resources like QuickBooks are geared to help small businesses with services like payroll functions.

Consider Permanent or Contract Staff

Next, you need to consider whether you want to hire permanent staff or use contractors.  If you choose to hire permanent staff, consider the cost of hiring and training new staff.  The average cost of onboarding a new hire is about $4,000. The upside is that employees typically work just for you and during hours you’ve established.

With that said, think about some of the services you offer and if they can be outsourced or done by freelancers. For instance, services like web design and marketing can be done from a virtual office. Just remember that independent contractors often have multiple employers and set their own hours. On the flip side, they’re not subject to tax or FICA withholdings.

Carefully Review the Candidate Pool

The worst thing you can do is hire someone who isn’t a good fit or who has a poor work ethic. The best way to evaluate those things is to complete a thorough interview. You want to ask questions that gauge the candidate’s compatibility and level of self-awareness.

Also, consider looking for candidates who have a background working with smaller organizations. This might seem backward, but think about it this way; candidates who have big business credentials are used to rules and are less likely to offer flexibility. Most entrepreneurs find employees through referrals from friends and colleagues. Using niche online job boards can narrow your search and connect you with well-qualified job seekers.

Don’t forget to assess your management skills. If you’ve never managed people before, study management styles that you’ve been exposed to, and find your style.

Hiring your first employee is a big step. By taking your time and doing things the right way, you’ll save money and time in the long run.