Curation posts were created to address small businesses’ biggest problems by gathering some of the best resources from around the web and summarizing them.
This month’s problem is – Hiring!
Quickly scan the most important points and click the link for a specific article if you’d like to learn more.
Curation posts are published once per month. So, be sure to check back!
Topic 1 – How to hire an employee for your small business
When your small business grows to the point that you can’t handle everything by yourself – it’s time to hire. Hiring is a somewhat complicated process, especially if you’ve never done it before. The information below will prepare you for hiring your first employee and every other employee after that.
Hiring employees for your small business: Tips before your first payroll
Find out more about how small businesses hire employees at Monster
Step one is to write a quality job description and to prepare interview questions. Get feedback from an HR expert, if you can. Additionally, consider drafting a simple employee manual.
Next, check into insurance that will provide protection against bad hiring. Background checks are advisable too.
Make sure you’re prepared for payroll taxes. The government will expect you to collect these taxes from the get-go.
Here’s a checklist of things to do to prepare to collect payroll taxes:
- Have the employee complete a W-4 form
- Have the employee complete an I-9 form
- Employment eligibility
- Start paying unemployment and worker’s comp insurance
- Make payroll tax deposits
- File with Federal tax authorities
- Also state and local, if necessary
Consider using a payroll service. They will handle all payroll taxes and filings. They will also help ensure that all wage and hour laws are obeyed.
Also, think about having an attorney draft an employment contract if you want to protect trade secrets or have employees sign non-disclosure agreements.
Educate yourself on Federal, state, and local employment laws. Laws can vary widely from locale to locale. Here’s a list of links to learn more:
- Internal Revenue Service
- US Department of Labor
- US Citizenship and Immigration Services
- US Equal Employment Opportunity Commission
- Federal Trade Commission
- National Labor Relations Board
- Occupational Safety and Health Administration
- Small Business Development Center
- State Departments of Revenue
- Labor agencies of the 50 US states
How to Hire Employees in 7 Steps
Learn more about hiring someone as an employee at Fit Small Business
- Create a job description
- Handle the administrative necessary administrative tasks
- Set up a tax ID
- Register business
- Obtain payroll software
- Find a workers comp plan
- Settle on pay, benefits, and perks for each position
- Use online job sites to get an idea of market rates
- Post your job opening
- Highlight your company culture
- Look into free applicant tracking systems (ATS)
- Ask your best employees for referrals, if applicable
- Consider hiring a recruiter
- Costly
- Review resumes and interview
- Understand anti-discrimination laws
- Make a job offer
- Be willing to negotiate
- Prepare for the employee’s first day
- Completing new hire paperwork
- Training, if necessary
Retaining quality employees helps to save time, save money, and reduce risk. Providing feedback, ongoing training, and engagement/appreciation/motivation all help with keeping quality employees satisfied and on your payroll.
Small Business Hiring: How to Hire Your First Employee
Read more about how to start hiring your first employee at Trusted Employees
Before taking the time to hire – determine what will fit in your small business budget. Use a job listing site to get an idea of the market salary and benefits. Consider part-time, temporary, or contract hires if you can’t afford a full-time employee.
Create a job description and post it online. Utilize your network too. If you don’t have the time, but do have the money – use a recruiter.
Interview your top candidates. Set up a consistent process for interviewing. This allows you to evaluate candidates fairly. Interview questions fall into two basic groups:
- Applicant experience, skills, and qualifications
- Applicant character and goals
Obviously, steer clear of questions related to race, gender, religion, etc.
Also, have questions prepared for references – if you will be checking them.
Prepare a formal job offer letter for the candidate you choose. Specify the wages, benefits, and conditions for employment in this letter.
If you’re running a background check on the new hire, let them know. Give the applicant a copy of the background check if you decide not to hire them based on what you learn.
When you do make your first hire:
- Make sure you have an employer identification number (EIN)
- Set up tax records
- Get insurance for the employee
- Print off any posters that are required by law
Topic 2 – The most beneficial time to make that first hire
Hiring, like any other expenses, is an investment in your company. Like all investments – you want a good return. Knowing when your small business should hire employees is tough. Especially if it’s the first employee. The information below will help you know when the time is right to make a hire.
When To Hire New Employees: Smart Tips for Growing Your Small Business
Find out when you should hire a new employee from FreshBooks
Hiring too soon is a drain on cash flow. Hiring too late is a drain on resources.
The right time to hire is when there’s enough work for the employee and when your small business has the financial capacity to manage the additional costs. Don’t forget the “hidden” costs – insurance, training, etc.
Hiring can take 10 weeks or more, so plan ahead!
Here are some factors to consider before hiring:
- Is your business growing?
- Is there an opportunity to increase revenue on the horizon?
- Have you had to decline work you would have otherwise taken?
- Causing revenue to flatten?
- Are your current employees (you?) at or near capacity?
- Is overtime increasing?
- Is your workforce lacking the necessary skills?
- Is employee morale decreasing?
- Is customer service declining?
- Are skilled employees handling menial tasks?
Should You Hire A Full-Time Employee?
Read about why it’s better to have full-time employees at Kabbage
Some of the pros of hiring full-time (vs part-time or contractors) are:
- More engagement and production
- A bigger and better pool of candidates
- More synergy among employees
Some of the cons of hiring full-time are:
- The cost of salary and benefits
- A lack of scheduling flexibility
Hiring Your First Employee?
Find out what to do when hiring your first employee from Just Business
There are some important questions to ask yourself before you hire your first employee.
First, how volatile is business in general and cash flow in particular? Having to let someone go when things get slow is inefficient. Consider temporary employees or contractors if you don’t have enough work to keep an employee consistently busy.
Second, is the employee necessary to grow the business? Would they have essential skills you don’t? Or, can they critical tasks you don’t have time for?
Third, will your finances support the hiring of an employee? Employees are expensive. The costs (time and money) start rolling in before you even read your first application/resume. Additionally, wages only make up a portion of the total costs. Not having enough cash to make payroll can be catastrophic.
Finally, are you prepared to deal with the “details?” There are many employment laws that you will have to familiarize yourself with. Additionally, you’ll need to document and retain records pertaining to time worked and wages paid. Then, there’s also a plethora of safety regulations that will need to be followed.
What advice would you give to a small business owner about hiring their first employees?
Learn more about what Quora users would do when hiring their first employee.
User Aleksandr Volodarsky advised to only hire for routine tasks, to begin with. This frees you up, as the entrepreneur, to focus on the most important tasks – increasing sales and revenue.
He also recommends that you create a guide for the new hire to refer to. Since these tasks are routine, this should be relatively simple and will help ensure that the new hire does things the way you want.
Finally, he suggests that you start off by hiring a freelancer. This will help you fine-tune the job requirements and will keep costs manageable until you’re certain that you need a full-time employee.
User Jamie Van Cuyk emphasizes preparation along every step of the hiring process. This includes:
- Preparing an exact job description
- Researching where your ideal candidate might be looking for a job
- Clarifying what skills you’re looking for on a resume/application
- Preparing questions to ask ALL interviewees
- Preparing for a new hire’s first day and onboarding
Finally, Mike Schoultz looks at things from a slightly different perspective. He answers the question by stating what he looks for in terms of employee qualities. These qualities include:
- Likeability and empathy
- Their ability to get along with a team
- Initiative and leadership
- Acting like an owner
- Flexibility
- The ability to adapt
- Humility
- No huge egos