By Sarah Mooney
Hiring varies from industry to industry, it varies from role to role too. However, there are best practices you can follow. Let’s dive into the questions you should ask yourself, the legal obligations involved in hiring, and how you can welcome your new hire.
1. Figure out what kind of employee you need
Having employees is a big responsibility for any employer. In order to avoid hiring someone you can’t afford, or don’t need, you need to figure out what kind of employee you need.
Take a step back and think about the tasks that need to be done. Track the amount of time you're spending on these tasks to determine which are the biggest time sinks. If you realize there are a few related tasks taking up 30 hours of your week, you might need a full-time employee. But if you're only spending 10-15 hours per week, a part-time employee or independent contractor could work.
If you have numerous one-off tasks that come with launching a new business, short-term help from a contractor is ideal. If you have multiple tasks that aren't going away anytime soon, long-term help is likely a better fit.
2. Take care of legal stuff
Now you should know what kind of employee you need. Getting legal organized involves paperwork and filing. But, don’t worry! It’s not something you’ll have to do all the time. To stay clear of any legal issues when hiring your first employee, be sure to take care of the following:
- Obtain an employer identification number (EIN): Every tax-paying business in the United States must have an EIN, which allows you to submit taxes to the IRS. Apply for your EIN online with the IRS for the quickest outcome.
- Set up unemployment taxes: While this isn’t something you need to do ahead of time, you will need to pay unemployment taxes for any new hires. Get ahead of this and locate the requirements with your local labor department using the State Labor Offices online directory.
- Look into health insurance: Your business isn't required to offer health insurance, but it's an attractive perk to offer prospective employees. Keep in mind that if you have more than 50 full-time employees, you’ll be fined for each one if you don't at least offer insurance.
- Familiarize yourself with Form I-9: Form I-9 is the employment eligibility verification form that verifies whether someone is eligible to work within the United States. You'll need to complete Form I-9 whenever you hire someone, so getting familiar with it early on isn't a bad idea.
- Establish new hire reporting: New hire reporting tracks new hires by state. This process requires little input on your end once the applicant has completed the required paperwork. To complete new hire reporting, use the new hire reporting matrix and contact your state office.
- Know federal laws: The U.S. Department of Labor is a great resource, and contains up-to-date information regarding hiring. If you have any questions or knowledge gaps, dig through the U.S. Department of Labor site or reach out for assistance.
Make a list with the above items and work your way through it. It might seem like a lot, but much of it only needs to be done once. Plus, it’ll become easier the more you do it.
3. Get your finances in order
Having your finances in order is essential when hiring your first employee. New employees cost money, require tax withholdings, and entail some IRS paperwork.
Before you hire anyone, you need a payroll system in place. Your new hire will have to fill out Form W-4, which covers withholding taxes. This tax form also covers any applicable state taxes and Medicare.
You should also have a business bank account set up, as this allows you to separate your personal and business finances.
4. Put together interview questions
Your interview questions should help you filter out job candidates who aren’t a good match. Dig deep and think about any necessary skill sets you’re seeking. Depending on the type of job, a test is a reliable way to determine if a candidate has the required skills. For example, if you’re looking to hire a writer or design-oriented role, ask for a portfolio. A portfolio will allow you to see what they’ve done in previous roles.
If you're having trouble coming up with questions, ask your professional contacts who have experience with this role. The goal is to put together questions that help candidates demonstrate their skill set during the hiring process. Interview questions shouldn’t be vague. Focus on the applicant's experience and how it relates to the role. You also want to get a feel for their personality during the interview, so don't hesitate to include a fun question or two.
5. Post the job listing
When hiring your first employee, it's crucial to get the job title right. The wrong job title will lead to the wrong job applicants. Job listings aren't always free, and the last thing you want to do is waste your time going through applications that will never result in a job offer. Research other listings similar to what you're looking for and make sure you're using the right title and language in the job description.
Make sure your job description and job title are thorough — specify the exact skills and kind of person you're looking to hire. Mention if you’ll be performing a background check and other basics, like salary range, whether it’s in-office or remote, and benefits. Once the job listing is live on your site, you can promote it on social media or job boards such as Indeed and Angelist.
6. Put together an onboarding experience
Create an employee handbook that lists employee benefits, company culture, brand guidelines, who to talk to for help, and other necessary information that gives the employee a clear idea of what to expect. You want them to comfortably adjust to the company and answer any questions during their first day and early weeks.
Also, take care of any remaining legal documentation during the first day (or before, if possible). For example, complete the W-4 form, which designates how much federal income tax the employee wants withheld. Check with your state's employment laws to ensure you're not missing any regional forms, either.
Repeating hiring success
Hiring your first employee is a big milestone for your new business. But it's very likely you’ll hire another, and another, and — well, you get the idea. Carefully document your first hiring process and take note of any hiccups you encounter. Doing this will allow you to improve your process as you continue to grow your team.
Take your time hiring your first employee, reach out to the appropriate state or federal departments when in doubt, and don't panic if you don't find the right hire during your first round of interviews. This process takes time, but it's a process worth the effort.
MassLight can help you build your startup. Simply apply to our Build for Equity program. We’ll build your product solely for equity. Think of us as an investor - we want you to be successful, so we’ll put in the work and the passion.