How to Hire Your First Employee
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Hiring a first employee is a key step for any entrepreneur looking to achieve greater success. However, finding the right candidate requires careful thought and planning.
To start, you must consider your business needs and budget. Then, you have to navigate legal requirements and create internal processes. Writing a detailed job description and posting to job sites like ZipRecruiter, one of the largest and best job sites for employers, can also help you recruit high-quality candidates. Over 3 million businesses of all sizes have used ZipRecruiter to hire.
To scale up your business, read our guide on how to hire your first employee.
Are you ready to hire your first employee?
Before you start hiring, it’s essential to evaluate your budget and needs. A new hire will undoubtedly impact your finances and responsibilities, so careful consideration will help determine the type of employee you need and can afford.
Additionally, consider your business and goals before making a decision. Reflect on what you expect this hire to contribute to the business. This will help identify the specific responsibilities the new hire will undertake, and consequently, the type of candidate you need to hire.
Using ZipRecruiter can definitely help streamline the hiring process by connecting you with a diverse pool of qualified candidates, ensuring you find the right fit for your team and budget. ZipRecruiter is now generating 685K+ job seeker profiles monthly.
Steps to hire your first employee
There are several steps to take before onboarding your first hire. These include paperwork needed to comply with federal and state laws, as well as steps involved in the recruiting and hiring process.
Step 1: Register your business
First, apply for an Employer Identification Number (EIN) if you don’t have one already. This is basically your business’s Social Security number. You’ll need an EIN to apply for business licenses, open business bank accounts and file your tax returns.
To apply, go to the Internal Revenue Service (IRS) website with your Social Security number and business information at hand and follow the instructions.
Next, register your company with the state’s Department of Labor in case your state requires employers to withhold state taxes or if your business must register for unemployment insurance to operate.
Step 2: Prepare your business
Set up a payroll system. Decide how to calculate employee pay, track hours worked and whether to pay your employees by check or direct deposits.
Payroll might also include calculating Medicare, Social Security, and unemployment tax withholdings as well as managing paid time off, sick time, overtime pay and vacation pay.
You must also get workers’ compensation insurance as it’s legally required in every state except Texas. This mandatory insurance, colloquially known as workers’ comp, protects your business from liability if an employee gets injured at work or contracts a work-related illness. Workers’ comp pays for medical treatment, rehabilitation and wage replacement, among other benefits.
Step 3: Post the job listing
Next, write the job description. Make sure to include the job title, responsibilities, requirements, preferred qualifications and a short description of your company, its mission and goals. You could also include benefits in your description to attract talent.
When your description is ready, open an account with ZipRecruiter or one of the other best job posting sites for employers and post the job listing. It’s also a good idea to share the job posting on your company’s social media accounts and within your network.
Don’t forget to monitor your account on the job posting sites for questions or job applications. Know that you can also find a recruiter that will do this legwork for you.
Step 4: Screen and interview candidates
Once you get applicants, take a look at their resumes, screen them and contact the ones that catch your eye to begin the interview process.
Use these calls to trim your list in case you have many applicants vying for the role. Then, schedule a formal interview and prepare interview questions. Use the interview to go over key points of the position or pose scenarios for the interviewee to comment on.
After selecting a candidate, prepare and send a job offer letter and run a pre-employment screening to, among other things, verify employment eligibility.
One of the best background check sites can help you verify the candidate’s ID, education, professional experience and financial standing.
Consider the cost of hiring an employee
Make sure to calculate both ongoing costs and one-time costs.
According to the Small Business Administration, the total base cost of employing a full-time worker is 1.25 to 1.4 times that employee's salary. This includes mandatory costs such as employment taxes and insurance, but it doesn't include the price of employee benefits.
Considering the competitive job market, it may be necessary to offer benefits like health care insurance and a company 401(k) to attract top talent, so you should consider including these costs in your budget estimates.
The average annual cost of employer-sponsored health insurance was almost $8,000 back in 2021, according to a Kaiser Family Foundation survey. On the other hand, 401(k) costs are harder to pin down as the set-up costs, administration fees and per-participant fees all depend on the type of plan and number of participants in it.
In addition to ongoing costs, you need to account for the hiring process. This involves not only job posting fees and background check costs but also employee onboarding, training and office supplies (including hardware and software).
Nowadays, that cost can be anywhere from $2,000 to $20,000 depending on the industry, position and job requirements.
What type of employee do you need?
In addition to the financial aspects of hiring, you must also consider what type of employee you need.
For example, if you’d like to delegate simple or repetitive tasks that demand fewer than 30 hours a week to complete, then a part-time employee probably fits your needs. Notably, you’d be exempt from the obligation to provide health care insurance under the Affordable Care Act in this case.
If, in contrast, you want to grow your business and need someone to take some of your work off your plate and handle more complicated tasks during a regular work week, then hiring a full-time employee may be more appropriate.
Of course, it's important to note that a full-time employee entails additional costs. As we mentioned above, a full-time employee costs 1.25 to 1.4 times that employee's salary, and this doesn’t include benefits. During this time, you should also determine how you will pay the employee; by the hour or a flat salary.
There is a third type of employee you must consider, especially if your business is seasonal. For seasonal businesses or short-term projects, perhaps an independent contractor makes more sense as you can hire them on a contract basis and you don’t have to think about offering benefits.
Summary of How to Hire Your First Employee
- Consider if your business has the budget for a new employee
- Decide what type of employee you need (full-time, part-time or independent contractor)
- Comply with state and federal income tax and workers’ comp insurance requirements
- Write a job description that includes responsibilities, requirements and benefits
- Post the job opening to recruitment sites like ZipRecruiter, screen applicants and interview candidates