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Hiring Your First Employees: Making the Move from Small Business to Employer

Posted on the 19 February 2020 by Ncrimaldi @MsCareerGirl

Hiring Your First Employees: Making the Move from Small Business to Employer

Watching the business that you've worked so hard to build grow larger is a highly rewarding experience, but it does have its challenges. With success comes the need to keep up with increased demand, and there's only so much that one person can do. At some point, it will be time to hire employees. This is a milestone for any business, and you should be proud that you've arrived at this turning point.

But before you start drawing up job descriptions, take a step back and make sure that you're familiar with everything that comes with hiring your first employees.

Brush Up on Your Tax and Employment Laws

Start by understanding the financial implications of hiring employees. In addition to budgeting for expenses like salaries and benefit contributions, you'll also need to budget for employment taxes. Businesses need to withhold federal income tax, social security and Medicare taxes from employees' paychecks. Additionally, your business will need to pay Federal Unemployment Tax out of its own funds. This tax is equal to 6.2% of the first $7,000 that an employee earns each year, so even if you're hiring someone part-time, you'll still face a significant expense.

While you're at it, take the time to meet with your lawyer to talk about employment law. Make sure that you understand the details of your state's employment law, including the minimum wage that you need to pay, how to avoid any potential discrimination in the workplace, and how to keep your employees' schedules legal.

Hiring Your First Employees: Making the Move from Small Business to Employer

Consider the Type of Employee That's Best

Before you start advertising a position, give some thought to the type of employee that would be best for your business. When you advertise, you have the option to look for an actual employee, or you could advertise for an independent contractor. You'll need to understand the differences between employees and independent contractors since each option offers certain benefits.

Generally speaking, independent contractors, sometimes called freelancers, are looking for "gig" work with more flexible scheduling requirements. They may work only a few hours a month if you need it or they do, and you don't have to contribute to taxes or benefits. Employees, either part-time or full-time, have a more formal relationship with your business. They'll work specific hours and there's an assumption that the hiring arrangement will be a longer-term one. Your business will need to contribute toward benefits and will need to pay into taxes for an employee.

As you're planning out the hiring process, think about your company culture and the types of employees that you want to represent your business. Establishing and understanding your company culture needs to be one of the early steps you take in preparing and building your business, and it's important that your employees represent and fit into that culture well. When you have a good understanding of the types of employees you're looking for, you'll be better able to write a job description that helps to attract those job applicants.

Hiring Your First Employees: Making the Move from Small Business to Employer

Think About How to Retain Employees

Once you've hired and trained employees, you'll want them to stay with your business for years. Focusing on employee retention strategies can help with this.

Employee retention can take on many different forms, but it's important to consider the types of "perks" that your employees will want from a job. Good salaries and comprehensive health insurance are important, but there are other ways to encourage employees to stay. Consider offering employees promotions, equity in your business, and office enhancements, like stand-up desks. Flexible schedules and remote work arrangements are highly valued today, too.

Providing a flexible paid time off policy is another great strategy that doesn't cost your business much but that can make a big difference for your staff. With a flexible PTO policy, sick time and vacation time are bundled together, allowing staff to use their PTO as they please and as they need. This means that employees can take time off to celebrate their religious holidays and birthdays or simply to take a much-needed mental health day.

Plan for Increased Paperwork

When you start advertising jobs, interviewing candidates, and hiring employees, the amount of paperwork in your business will increase. This is particularly true during the hiring process, especially if you're hiring multiple employees at one time. Think about how you'll deal with that increased paperwork, as well as steps you can take to keep your employees' personal information safe.

Secure data management becomes more important when you have employees. Your business will need to be prepared to securely store any data you collect on employees, and there are laws that regulate how you can appropriately do this. If you haven't already, it may be time to invest in a business records retention program, even if your business is still small. Talk to your lawyer about the steps you'll need to take to make sure that you're complying with laws and protecting your employees' information.

When you look at everything that's involved with hiring employees, the process can seem overwhelming, especially if this is your first time hiring someone. However, the process will get easier the more often that you do it, and having employees can help to take your business to that next level as it continues to grow.

This guest post was authored by Dan Matthews

Hiring Your First Employees: Making the Move from Small Business to Employer
Dan Matthews is a writer with a degree in English from Boise State University. He has extensive experience writing online at the intersection of business, finance, marketing, and culture.
Hiring Your First Employees: Making the Move from Small Business to Employer

Ms. Career Girl was started in 2008 to help ambitious young professional women figure out who they are, what they want and how to get it.


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