How to hire your first employee

---

*Content includes mentions of our sponsor ZipRecruiter’s branding.

Hiring a first employee is a critical step for any business owner looking to achieve greater success. However, finding the right candidate requires careful thought and planning.

To get started, you need to consider your business needs and budget. So, you need to navigate the legal requirements and create internal processes. Writing a detailed job description and posting it on 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 companies of all sizes have used ZipRecruiter to hire.

To expand 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.

Also, consider your business and your goals before making a decision. Think about what you expect this hire to contribute to the company. This will help identify the specific responsibilities the new hire will take on and, therefore, the type of candidate you need to hire.

Using ZipRecruiter can definitely help streamline your hiring process by connecting you with a diverse pool of qualified candidates, ensuring you find the right fit for your team and your budget. ZipRecruiter now generates over 685,000 job seeker profiles every month.

The steps to hire your first employee

There are several steps to take before making your first hire. These include the documentation needed to comply with federal and state laws, as well as the 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 already have one. This is basically your company’s social security number. You will need an EIN to apply for business licenses, open business bank accounts, and file tax returns.

To apply, go to the Internal Revenue Service (IRS) website with your Social Security number and business information on hand and follow the instructions.

Next, register your business with your state 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

Establish a payroll management system. Decide how to calculate employee pay, track hours worked, and whether to pay your employees via check or direct deposits.

Payroll may also include calculating Medicare, Social Security and unemployment tax withholdings, as well as managing paid time off, sick time, overtime and holidays.

You must also have workers’ compensation insurance as it is legally required in all states except Texas. This mandatory insurance, colloquially known as workers’ protection, protects your company from liability if an employee is injured on the job or contracts an occupational disease. Workers’ compensation pays for medical care, rehabilitation and wage replacement, among other benefits.

Step 3: Publish your job listing

Next, write the job description. Be sure to include your job title, responsibilities, requirements, preferred qualifications, and a brief description of your company, its mission, and its 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 top employer job posting sites and post your 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 job posting sites for job inquiries or applications. Know that you can also find a recruiter who will do this work for you.

Step 4: Select and interview candidates

Once you have candidates, take a look at their resumes, shortlist them, and contact the ones that catch your attention to begin the interview process.

Use these calls to trim your list in case there are many candidates vying for the role. Next, schedule a formal interview and prepare interview questions. Use the interview to go over key points of the position or propose scenarios for the interviewee to comment on.

Once you have selected a candidate, prepare and send a job offer letter and perform a pre-employment screening to, among other things, verify suitability for employment.

One of the best background check sites can help you verify the candidate’s identity, education, professional experience, and financial situation.

Consider the cost of hiring an employee

Make sure you calculate both ongoing costs and one-time costs.

According to the Small Business Administration, the total base cost of hiring a full-time worker is between 1.25 and 1.4 times the employee’s salary. This includes mandatory costs such as employment taxes and insurance, but does not include the price of employee benefits.

Considering the competitive job market, you may need to offer benefits like health insurance and a company 401(k) to attract top talent, so you should consider including these costs in your budget estimates.

According to a Kaiser Family Foundation survey, the average annual cost of employer-sponsored health insurance in 2021 was nearly $8,000. On the other hand, 401(k) costs are more difficult to define because setup costs, administrative fees, and per-participant fees all depend on the type of plan and the number of participants in the plan.

In addition to ongoing costs, you need to take into account 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 range from $2,000 to $20,000 depending on the industry, location, and job requirements.

What type of employee do you need?

In addition to the financial aspects of hiring, you also need to consider the type of employee you need.

For example, if you want to delegate simple or repetitive tasks that take less than 30 hours per week to complete, a part-time employee is probably right for your needs. Notably, in this case you would be exempt from the requirement to provide health insurance under the Affordable Care Act.

If, on the other hand, you want to grow your business and need someone to take some of the work off your shoulders and handle more complicated tasks during a normal workweek, then hiring a full-time employee may be more appropriate.

Of course, it is important to note that a full-time employee comes with additional costs. As mentioned above, a full-time employee costs 1.25 to 1.4 times their salary and that doesn’t include benefits. During this time, you should also determine how you will pay the employee; hourly or with a fixed salary.

There’s a third type of employee you need to consider, especially if your business is seasonal. For seasonal tasks or short-term projects, perhaps an independent contractor makes more sense as you can hire them on a contract basis and don’t have to think about offering benefits.

Summary of how to hire your first employee

• Consider whether your company has the budget for a new employee

• Decide what type of employee you need (full-time, part-time or freelancer)

• Comply with state and federal income tax and workers’ comp insurance requirements

• Write a job description that includes responsibilities, requirements and benefits

• Post job openings on recruiting sites like ZipRecruiter, screen candidates and interview candidates