Ready to hire your first employee for your small business? Congratulations! You’ve reached an important milestone: you’re joining the millions of other U.S. small businesses that create 1.5 million jobs every year.
So, once you’ve interviewed and found a potential candidate, how do you hire your first employee?
Steps to Hiring Your First Employee
Here’s how to hire your first employee, from conducting background checks and drug testing, to compliance, recordkeeping, and insurance.
- Perform a Background Check
- Administer a Drug Test
- Check References
- Know What Questions to Avoid
- Determine Salary and Job Title
- Collect Required Documents & Information
- Know Your Insurance Requirements
1. Perform a Background Check
Performing a background check on a potential new hire is a crucial step.
Most screening and testing policies for new hires are intended to help business owners avoid potentially damaging or embarrassing scenarios.
By using your best judgment and analyzing every possible candidate’s history and behavior, you gain an extra layer of scrutiny to help you avoid problematic employees.
A job candidate may seem trustworthy and hardworking, but without a background check, you run the risk of hiring someone you really know nothing about. So, consider engaging one of the following reputable background checking companies to perform speedy, thorough background checks.
- GoodHire offers FCRA-compliant pre-employment background checks for businesses of all sizes.
- Accurate offers affordable pay-as-you-go packages for quick background checks.
- HireRight provides background checks as well as employment and education verifications.
2. Administer a Drug Test
You may want to ensure the reliability of a potential first employee by additionally testing them for any illegal substances via a drug test.
Drug testing offers you the assurance the candidate, if hired, is not engaging in behavior that can put you or your small business at risk. Here are three reputable drug testing companies that operate nationwide:
- LabCorp offers drug testing for employers through urine testing.
- Concentra offers both pre-employment and random drug testing at one of their many conveniently located medical centers.
- Sterling offers background checks, pre-employment drug testing and health screening.
3. Reference Check
Check the references provided by your potential first employee. This is another important step to ensure you are bringing the best possible candidate onboard.
By taking the time to come up with a few important questions to use when checking their references, you can better understand your candidate and whether they can provide what your business needs.
Questions to consider asking include:
- Was this person reliable and dependable?
- What are their strengths and weaknesses?
- Would you recommend this candidate for the job?
- What was one of their most memorable accomplishments?
- What are their strongest skills? And where are the gaps?
4. Know What Questions to Avoid Asking
It’s important to get to know as much about your potential hires as you can by asking thorough and detailed questions. However, there are certain questions you shouldn’t ask to avoid breaking the law.
Here are some laws you need to consider:
- Title VII of the Civil Rights Act of 1964 covers discrimination and harassment on the basis of race, religion, sex, or creed.
- The Age Discrimination in Employment Act of 1967 forbids age discrimination for employees 40 years of age and older.
- The Americans with Disabilities Act of 1990 prohibits discrimination against people with disabilities.
- The Family Medical Leave Act of 1993 requires covered employers to give the proper leave to employees for certain medical or family reasons.
There are numerous other questions that are illegal to ask job candidates including:
- Race, color, or national origin
- Sex, gender identity, or sexual orientation
- Pregnancy status
- Citizenship status
- Marital status
- Number of children or if they’re planning to have kids
5. Determine Salary and Job Title
The competition for talent is off the charts today. So, every small business needs to find ways to incentivize talented workers to choose their company over another.
By providing a competitive salary and meaningful title, you can attract top talent.
Here are a few tips about how to provide a competitive salary:
- Research the market for comparable salaries for jobs in your industry and your region. You can check out Glassdoor and Payscale to find this information.
- Determine the median wage for the position. Once you know the general range of salaries for that type of job, you can decide on a competitive payment.
- Figure out what perks you can offer to supplement the salary, including health insurance, PTO, and bonuses.
- Remember, the more you will demand from this employee, the higher their salary should be to ensure you find someone capable of fulfilling your requirements.
6. Collect Required Documents & Information
Paperwork may be the most frustrating part of the hiring process, but it’s incredibly important to collect the right information to send to the U.S. Department of Labor and the IRS.
The Department of Labor requires employers to file certain information whenever there is a new hire. Here is a list of information you need to collect:
- Employee’s full name
- Social security number
- Mailing Address
- Date of Birth (if under age 19)
- Time of day and day of the week when employee’s workweek begins
- Hours worked per day and per workweek
- How often the employee is paid
- Regular hourly pay rate
- Total daily or weekly “straight time” earnings for each workweek
- All additions to or deductions taken from the employee’s wages
- Total wages paid each pay period
- Date of payment and pay period covered by each payment
You may need to collect this same information for the IRS.
7. Know Your Insurance Requirements
Every state has its own requirements when it comes to the level of coverage your small business needs to provide your employees. This coverage also can vary by the size of your business. To find out your state’s requirements check out the National Conference of State Legislatures.
Here are several different options for finding coverage for your employees:
Providing the right coverage for your employees is an excellent way to attract talented workers to your small business. While most very small companies are not required to provide health coverage, it’s a crucial perk employees look for. Check the legal requirements in your state to make sure you’re in compliance when it comes to health insurance coverage.
Hiring Your First Employee Doesn’t Have to Be Difficult
Hiring the first employee for your small business is a major milestone. Employees can fuel growth, but hiring comes with a lot of responsibility too.
Make sure you know your local, state, and federal laws, do your due diligence on all potential employees, research salary requirements to stay competitive, keep good records and provide the appropriate coverage for employees.
If this all sounds daunting, consider using an all-in-one hiring platform like Gusto. Plans start at just $6 a month per employee plus a $39 monthly fee. Gusto offers:
- Affordable full-service hiring suite
- Automatically files payroll taxes
- Easily added medical, dental, or vision coverage
- Consult with certified HR experts 7 days a week
- Time tracking, sending offer letters, and much more.