When you're hiring your first employee, it may seem overwhelming to consider all that is required to honor your growing business, your customers and those who will be working for you. The best way to hire your first employee is to prepare for it. The point of hiring someone is to help while you turn your focus to other tasks that need your attention. If you're not prepared, you may spend more time directing your new hire than actually getting work done. 

Get ahead of the game with these preparation tips before you hire your first employee.

Tips for Hiring Your First Employee

Determine If It's Time

If your business is growing at a rate that's challenging to manage, it could be time to hire an employee. It also could be time to outsource something and keep going solo. To determine if it's time to hire an employee, consider the following:

• Are you busy and overwhelmed because you're just not organized? Or does the work actually require more than one person to grow your business?
• Have you created processes or documented procedures that can be repeated by an employee so you can focus on other things?
• Do you have enough repeatable and/or ongoing tasks for a new employee that will take at least 20 hours a week?

If you're ready to hand off activities so that you can focus on other tasks such as a new product or service launch, marketing campaign or sales activities, then you're probably ready to hire your first employee.

Check Your Cash Flow

While you may be ready to hire, can your cash flow handle it? Get your financial books organized so that you can know what salary you can afford to pay while still paying your other expenses. Also, remember that your new employee should be taking on tasks that will either make money for your business or save money. If you simply need more time in your day, you might consider outsourcing part of your daily tasks such as accounting or office management. If you still need help but aren't sure if you can afford someone full-time, consider hiring a freelance contractor or part-time employee. 

Use Your Network

You may have someone in your network who would be the perfect employee or know someone who'd be perfect for your business. Start there before advertising your job requirements. Build out your company LinkedIn page and use the social network to find someone to hire. Entrepreneurial-minded job seekers make the best new hires for small businesses or startups. Find someone who complements your style. For instance, if you're the idea person, perhaps a good match is someone who will integrate or build your ideas to fruition.  Instead of relying on their job experience to tell the whole story, look for those with characteristics such as honesty, integrity, adaptability and similar values. Run a background check on your new hire to look for red flags that they may not be someone you can trust or that they may cause problems as you grow the company.

See also: 5-Step Checklist for Hiring a New Employee

Create HR Policies

If you really want to make a good first impression on your new hire, get your human resources policies created. These procedures will provide guidance for yourself and any future employees. It may be a challenge to build these out now but they will greatly serve you later as your business grows.

Some information to include as part of your hiring  and employment policies include:

• Job descriptions
• Application for employment
• Background Check Consent form
• Federal form I-9
• Federal form W-4 or W-9 if contractor
• Benefits forms
• Employee Handbook
• On-boarding procedures

Understand the Legal Responsibilities

Hiring an employee requires some legal documentation as well as other federal and state responsibilities. You cannot strictly not hire someone because of information found on their background check. You also cannot discriminate based on gender, race, religion, sexual identity or other reasons protected by the Equal Employment Opportunity Commission (EEOC).

The steps to hiring someone should also be considered. Many states and cities have passed legislation that bans employers from asking up front about criminal background on an employment application. If you are using the results of a background check to determine your hiring decision, think about offering the job first, pending the results of the screening. If, after the job is offered, the criminal background check reveals something that would affect job performance or put you or your customers in danger, you can consider withdrawing the job offer. Even when telling a candidate that they've failed their background check, you must follow adverse action procedures specified in the Fair Credit Reporting Act (FCRA). 

Other legal tasks to perform before hiring your first employee are:

• Getting an employer identification number
• Registering with your state's labor department
• Obtaining workers compensation insurance
• Setting up a payroll system for withholding taxes
• Having your new hire fill out the proper paperwork such as W-4, I-9

This paperwork can be stored in a personnel file. Also, as an employer, you are also held responsible for keeping employee data safe. Be aware of these laws that apply to employers so you and your business are protected from litigation.

The dream of having someone help grow your business doesn't have to turn into a nightmare. Understand your responsibilities as an employer and get prepared before you hire your first employee. The work you do now will make your new hire feel welcome into a business that is ready to grow and has already taken steps to get there.

Have any questions about hiring and screening your first employee? We can help.