Your business is growing, so you need to hire employees to lighten your load and diversify your talent. Hiring employees is an added expense and requires a bit of HR expertise, but it’s a necessary (and sometimes scary) step in the growth of any company.
When done right, it’s the move that will take your company to the next level. But that doesn’t make it easy, or foolproof.
"Knowing when you’re ready to hire is tricky. Growth is essential, but hiring too soon can hurt the bottom line and be a burden you are not prepared for. Once you know you’re ready, do your due diligence to make sure you know exactly what you need out of your team and get the best talent you can afford.” - Nick Louca, Head of New York, Robert Walters.
Our team at Robert Walters is experienced in helping start-ups add their first employees. Here are some tips for how to manage your initial hiring smoothly:
Make a hiring plan
First things first: figure out what you can afford. Weigh the overhead with the potential revenue boost that will occur as a result of increased productivity and expertise.
Then, create loose job descriptions. Of course, your first few employees will be doing a bit of everything. If you founded this company, you’ve probably made your fair share of coffee and cleaned the coffeepot, too. Hiring willing go-getters who can wear a lot of hats is a good practice for a start-up. But down the line, these first few hires will eventually take on more streamlined roles, so hire for their niche skills.
Once you have a good idea of what you expect to get out of each position, write down solid job descriptions. Then, begin interviewing.
Along with determining a candidate's willingness to do a little bit of dirty work, use the interview process to assess their specific skills. Ask them what sort of roadblocks they’ve run into in past positions, and how they’ve solved dilemmas.
One of the most vital things you’re doing in an interview is assessing whether a candidate is a good fit for your company culture, and this is largely an intuitive call. But don’t just trust your intuition. Make sure you conduct thorough background checks and check all references before making a hire.
“Nearly 40 percent of all job applications and resumes include bogus or inflated facts. So make sure you know exactly who you will be working closely with to build your company."
One last thing about interviewing - it’s important to know what questions are illegal during a job interview. Even if you’re just making friendly chit chat, never ask about an applicant's age, marital status, sexual orientation, religious affiliation or race. You must also refrain from asking specific questions about an applicant's physical, emotional, or mental handicaps unless the answers will allow you to make special accommodations in order to perform the job.
Employee taxes and paperwork
Before you begin to hire, make sure you have an Employment Identification Number (EIN) from the IRS. This is also called an Employer Tax ID or Form SS-4. It enables you to report taxes and employee information to the IRS and state agencies.
You should also set up an internal process to keep records of your employee information, employment taxes, and all financial documents related to employees.
Withholding taxes you’ll be responsible for once you have employees include:
Depending on the state your business is located in and pays taxes in, you may also have to withhold state income taxes from your employee paychecks. Make sure to find out what the tax laws are in your state.
It’s federal law that you verify each employee’s eligibility to work in the U.S. For this reason, within three days of hiring an employee, employers must complete Form I-9 and collect any necessary documents to prove the employee’s citizenship status and work eligibility. You don’t have to file these forms with the government, but you do have to keep them on file for three years after you hire an employee - or one year after that employee is terminated, whichever comes second. You’re also legally required to report new hires to a state directory within 20 days of the hire (or rehire).
By law you must carry workers’ compensation insurance if you have employees. See the Employment and Labor Law steps on SBA.gov for details.
In order to hire smart, follow the above steps, and try to strike a balance between visionary and financially prudent.
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