Hiring Your First Employee? Here’s What You Need to Know

Date: July 12, 2018

Small businesses in America are showing strong signs of economic growth, as 57 percent of them recently indicated they’re hiring or planning to hire. But if you run a small startup, a hobby business, work as a sole proprietor, or run a business from your home, you might take care of most—if not all—of the work yourself.

Once that work gets to be a bit too much to handle on your own, it might be time to look into hiring your first employee. If you’ve never hired a new employee, there’s a lot to know—and do—to make the right addition and ensure your business makes the most of the investment.

Read on for tips on how to make your best first hire… the first time.

Consider All Options

Making your first hire is an exciting milestone. It means you’ve started and grown something to the point of expansion, crunched the numbers, and determined it’s time to invest in some help. But are you sure a full- or part-time employee is needed?

There are lots of ways to get help from others to grow your business, and depending on the stage you’re in, a full- or part-time employee could be a larger expense and commitment than you expect.

Just be sure not to overlook less permanent options. Seasonal workers, interns, student workers, or contractors could be a better bet. It all depends on the amount of help you’re looking for, the resources you have available to compensate them, and whether or not you need temporary help. These approaches are a low-risk way to test out a potential employee before committing to hiring them, too.

Additionally, how you determine a worker’s classification (as an independent contractor versus an employee, for example) becomes more difficult if you have an ongoing business relationship with a worker who might eventually claim to be your employee. The consequences of misclassifying an employee are significant, so make sure you’re hiring someone to work in the capacity your business needs (and that you can afford).

Related: How to Distinguish Between Employees and Independent Contractors

Make Sure It’s a Great “Fit”

As a small business owner, you’re likely highly motivated, focused, entrepreneurial, and able to juggle a lot more responsibilities (and stress) than the average person.

Depending on your business, industry, and the work you’re hiring for, you probably want to seek out someone who aligns with, well, you. Especially since your business is probably in the earlier stages, your new hire will probably have much more of an impact on the growth and trajectory of your company than a business’ 50th or 100th employee. But all those businesses, at some point, had to start at some point with their first hire, too.

Try to focus on finding a new hire that fits, and not necessarily the person with the most skills or flashiest resume. Unless you’re hiring for a specific niche or specialized skill (in which case you want the most qualified, certified, and educated candidate possible), you probably want someone who’s excited and motivated to work for you, but also with you—not someone who cares more about what they’re going to get out of the position.

It might take a few candidates to find the right fit, but you’ll know it when it happens, and the odds of success might be greater than they would be if you hired candidate that seems best on paper.

Related: Get Creative in the Hiring Process to Find the Right Talent

Do It “By the Books”

It’s crucial for any reputable, successful business to hire (and, if need be, fire) legally, in order to avoid potential lawsuits and government investigations.

As a new employer, it’s important to do it right the first time, both to avoid legal trouble and build a reputation as a great employer. Make sure you research and understand the basics of hiring legally, especially when it comes to contracts, taxes, and insurance.

This requires making sure you have the proper contracts in place for your new hire, and have these agreements closely reviewed by a lawyer. Similarly, you’ll want to be set up properly for payment and taxes, so find a trusted accountant to help you.

Finally, while some states might not require your small businesses to carry workers’ compensation insurance, the rules can vary drastically by industry, business size, and the type of help you hire, so don’t get caught lacking the necessary coverage.

Related: Workers’ Compensation Law – State by State Comparison

Use an Employee Handbook

One of the best ways to ensure your new hire is brought on board properly is to write and present to them an employee handbook.

Especially if you plan to continue growing your business by adding more employees, you should write your employee handbook in advance of your first hire. It doesn’t need to be a lengthy document. Rather, it’s a simple—but vital—communication tool for getting new employees up to speed on everything about your business. It also serves as an important piece of protection, and it should evolve as your business does.

Some states even view the employee handbook as an employment contract, so when it’s written with precise language and effective disclaimers, it can be your legal shield in the event of future conflict, and help keep you out of court.

A good handbook strikes a balance between clear and concise, and legal and thorough. It should cover all of your compliance obligations as an employer.

Related: How to Write a Great Employee Handbook

Treat Them Well

Especially if you plan to hire more employees in the future, how you treat your first hire will influence their willingness to refer other employees, speak fondly of their experience working for you, and affect your reputation as an employer.

Lots of job candidates will seek out feedback from current employees, browse employer review websites, or scan social media to see how people perceive businesses of all sizes when they’re looking to apply for or accept a job.

Your first hire can become an ambassador and loyal collaborator if treated well. Reward them, give them feedback, and seek feedback for yourself as a new employer.

You might end up learning just as much as they do through the experience—about yourself, your business, and where you want your small business to go.

Find more tips and resources from experts and other NFIB members like you, or join now to access exclusive savings on business products and services that save you time and money.

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