How to Begin Hiring Employees for Your Small Business
Know the right questions to ask when preparing for your first hire and how to recruit employees.
Every small business owner dreams of the day when their idea grows into a viable and profitable business. As you start to reach some of your small business goals, there usually comes a point when it’s time for you to say goodbye to being the sole employee of your business and hello to the idea of hiring others to help grow your business.
But, before you start composing job descriptions, you will need to follow a few steps to proactively ready your business to take on new hires.
The process of transitioning into the role of an employer — though ultimately fulfilling and beneficial — requires a good deal of work and preparation. The good news is, it’s not difficult work, you just need to know what steps you need to take in order to prepare for your first employee. When you're ready to hire your first employee, there are some things to take into consideration. Learn how to navigate small business hiring with this guide.
6 Steps to Prepare Your Small Business for Your First Hire
Before you begin searching for talent, consider taking the following steps to make sure your small business is ready for a new hire and poised for success.
Obtain an Employer Identification Number (EIN)
The first obstacle you want to tackle after deciding to begin to hire, is to apply for an Employer Identification Number, commonly referred to as an EIN.
More simply put, an EIN works like a personal social security number, except it is for your business. An EIN is a tool used by the Internal Revenue Service (IRS) to identify and keep track of your business’s taxes. Your EIN will allow your small business to pay state and federal taxes.
If you want to hire an employee for your small business, then you’re required by law to have an EIN.
Though anything that involves the IRS may seem daunting — don’t worry. Obtaining an EIN for your small business is actually relatively easy. It can be as simple as applying online on the IRS website.
Understand State-Specific Rules & Regs
Depending on which state your small business calls home, you may need to take additional steps to ensure that you are following your specific state’s requirements. Although each state has its own rules and regulations, the majority require businesses with employees to pay taxes at the state level and have specific protocols that must be followed.
At this point you may want to consider enlisting the help of an accountant. These professionals can help you feel confident that you’re making all of the right decisions before hiring your first employee.
An added bonus is that accountants can also help you understand other rules and regulations surrounding hiring employees, such as employee insurance and minimum wage requirements within your state.
Learn About Employee Types
Once you’ve obtained your EIN and understand any other state-specific requirements, it’s time to be clear about the type of employee you intend to hire. When it comes to different types of employees, your small business has two options: employees or independent contractors.
The IRS typically views workers through the lens of three distinct criteria to determine if they are employees or independent contractors. These criteria include behavioral aspects, financial aspects, and the type of relationship that a worker has with their employer.
Though some states have their own specific criteria for distinguishing between employees and independent contractors, each type of employee typically has specific attributes.
Which type of worker suits your small business’s needs will depend on several factors such as the type of work that needs to be done and the amount of help you need. Before moving forward and beginning the process of actually hiring someone, it’s important that you’re clear on the type of employment — employee or independent contractor — you are offering.
Employees and independent contractors have different tax requirements, and being unclear about the type of worker you’re hiring could cause some unnecessary problems in the future.
Learn about Taxes & Costs
Once you’ve obtained an EIN, you’ll have to consistently keep track of employee taxes and withhold a specific amount from their wages in accordance with state and federal tax laws. The funds withheld for taxes will need to be deposited in a separate account.
This is another case in which the help of a professional accountant may be worth pursuing. Both accountants and lawyers have the specialized expertise necessary to help walk you through the process of consistently complying with the IRS as an employer.
In addition to there being many tax-related responsibilities as an employer, there are also less obvious costs to consider. For example, as an employer you’ll typically have to contribute an equal amount of taxes for social security and medicare for each employee. The bottom line is, hiring employees does not come without costs. Therefore, it’s important for you to be able to anticipate and balance those costs against your need to bring a new hire onboard.
Create a Payroll Structure
Before hiring an employee, it’s important that you know how your payroll will be structured. There are a number of laws surrounding payroll that you’ll have to comply with as an employer, and for first-time employers, it can sometimes be difficult to navigate this process.
At this point, it can be incredibly helpful to enlist the help of a payroll provider to help make this process easier and more accessible to both you and your employees. In addition to providing an infrastructure for payroll, these providers typically also offer HR and employee operations services.
Though it’s possible to go about creating a payroll structure and operation on your own, enlisting the help of a professional can help take some of the load off of your shoulders.
Determining how many employees to hire for your small business is a crucial part of successfully transitioning into the role of employer. If you take on too many employees, the cost of labor may be too high for you to sustain. If you take on too little help, you may inadvertently overwork your employees and negatively impact how your business functions.
Before you start conceiving roles that you think would be helpful to have, it’s important to be honest with yourself about how many employees you can afford and how much help you really need. Whether you're looking to add one person or twenty, remember to weigh your needs and costs and make a decision that considers both.
Best Practices When Beginning the Hiring Process
Once you have prepared your business to take on employees, you’re probably excited to jump into interviewing candidates, but it’s important not to rush into things. As such, it can help to be aware of some best practices that you can follow as you begin developing your hiring process.
Be Clear About the Role
Before you can get started reading resumes, you’ll need to be clear about the role you wish to fill. This means becoming clear on several factors – such as the type of worker, the responsibilities of the role, and the amount of time they will work.
Obviously, this will look different for every small business owner, and details such as employee type will come into play. But,before you even think about posting a job description, you’ll want to be extremely clear about the role, type of work involved, and the work experience required if there is any.
Craft a Job Description
Before you start blasting out job postings on various websites, it’s important to take time to craft an accurate and clear job description. If you rush through this part of the process and end up creating a job description that doesn’t truly represent the role you seek to fill, you run the risk of hiring the wrong person.
When crafting a job description, be sure to include all of the duties and responsibilities that will come with the role. If the role only requires someone to work ten hours each week, make sure to be explicit about this. Being accurate in your job description can help you avoid the process of having to let an employee go and begin this process all over again.
Post the Job Description
Once you’ve done all of the groundwork it’s finally time to start casting the net and catching applicants. To do this effectively, you’ll want to use many job posting websites rather than just one.
Today, there are many respected job posting websites that you can utilize to post your open job role. Established websites like LinkedIn, ZipRecruiter, Indeed, and Glassdoor can help get your job posting viewed by thousands instantly.
If you’re beginning to think that keeping track of applicants and employees may start to become difficult — the truth is, it just might. Luckily, there are services that can help you manage your HR responsibilities and free up time to focus on other aspects of your business.
Utilize HR Management Services
If it’s your first time hiring an employee, then chances are that the huge amount of applicants you might get will be overwhelming. Thankfully, this isn’t something that you have to attempt to overcome on your own.
HR services — such as EZ Texting’s texting for human resources and employee operations — can make the process of managing HR-related tasks easier and less overwhelming. Taking advantage of these services can help make the transition from being a one-person small business operator to an employer smoother and less stressful.
Take Advantage of Cost-Reducing Recruitment Practices
Though email is a tried and true method of contacting applicants — the best potential hires will likely have a cluttered inbox that’s littered with potential employers getting back to them. As such, it can be useful to take advantage of other effective ways to communicate and connect with potential applicants.
Taking advantage of less obvious forms of communication — such as text and SMS communication — can help you cut through the noise and connect easily with sought-after applicants. By taking the extra step to connect more deeply and effectively with your applicants, you can greatly increase your chances of landing the perfect employee for your small business.
Improving Your Small Business Operations with EZ Texting
If you’re at a point in your entrepreneurial journey where you need to hire an employee, then EZ Texting’s services are the perfect way to take your small business to the next level. EZ Texting offers a wide range of SMS and text marketing services that can help you build your brand, connect with your customers, and grow your customer base.
Still unsure? Find out how impactful EZ Texting’s services can be to your small business now with our no-risk free trial and watch as your business grows into a powerful brand.