Not everyone starts a business knowing how to hire employees—many of us have to learn along the way. This learning curve is part of owning a business, though this can come with some serious pitfalls, from creating poor team dynamics to violating anti-discrimination laws. So to shorten this curve and avoid making common mistakes, it’s important to learn how to hire employees the right way. Follow along for everything you need to know about making your first hire.
Prepare the Business Legally
To hire an employee, you will need an Employer Identification Number (EIN) with the IRS and a state tax ID if your state requires it. An EIN is a tax ID number for a business. It works like your Social Security number (SSN) for tax purposes, and you can get it for free by applying online through the IRS.
If you’re a sole proprietor or partnership, you can apply for an EIN and use that in place of your SSN for taxes. If you plan to form an LLC, LLP, corporation or other legal entity, do that before applying for your EIN, so you can get the tax ID in your business’s name instead of your own.
You’re not required to form a legal entity to hire employees, but it could be beneficial. An LLC, the simplest type of entity you can form as a single owner or with partners, separates your personal assets and liabilities from those of the business.
Because bringing on employees adds potential liability to the business, you might be concerned about shouldering those liabilities with your personal assets, such as your home or personal savings. Consult an attorney to determine the right business structure for your circumstances.
Depending on the business you run, your state might also require you to carry insurance for things such as unemployment, workers’ compensation and general liability to ensure security and safety for employees. An attorney can help you stay compliant with your state’s requirements.
Write a Clear Job Description
One of the most important steps to building the right team is writing the right job description. A well-crafted job description includes:
- A glimpse into your company culture
- The level of influence, autonomy and decision-making the role involves
- How the work will impact the company and the people you serve
- Required and desired skills, experience and traits
- Opportunities for growth through this role
- Day-to-day work of the role in its most recent iteration
- What success in this role looks like (i.e., expectations)
- Statement of company values such as diversity, equity and inclusion, including how you incorporate them into your work and hiring practices
The trickiest part? Include all this juicy information in a succinct and brief description. Job hunters read a lot of job ads throughout the day, and they can meld together. Make yours stand out by being clear, concise and straight to the point.
Another tricky part is balancing what you believe is required of a candidate and your commitment to equity. Evaluate what’s truly required for the role, and write an inclusive job description that avoids using language or listing requirements that unnecessarily exclude candidates.
Then evaluate the job description one more time to make sure you don’t unintentionally include any prohibited language or requirements that illegally discriminate under Equal Employment Opportunity (EEO) laws.
Your ads (and other hiring and employment practices) can’t show any preference for or against someone because of their race, skin color, religion, gender identity, sexual orientation, pregnancy or parenthood, national origin, age (40 or older), ability or genetic information, explains the Equal Employment Opportunity Commission. That includes blatant requirements such as “female,” but also includes descriptions that suggest prohibited preferences, such as “recent college grads” or “aggressive.”
Consider Company Culture
When you’re considering what’s required for the role, go beyond qualifications and consider what a new hire might add to your company culture. Employees are more than just working machines—they make up the fabric of your company.
Be careful not to get caught in the trap of hiring for “culture fit,” though. This can be an easy way to introduce and double down on your biases.
Instead of looking for candidates who match your existing culture—which, if this is your first hire, means they’re just like you—look for candidates who will add an element you’re missing. As Michael Bungay Stanier said in an interview for Jenny Blake’s “Free Time” podcast, “You don’t just want a culture fit, you want somebody who is a culture expander, who changes the culture and shifts it.”
Get in Front of Candidates
The best job description in the world is useless if you don’t get it in front of the right people, so be intentional about where you spread the word about the job.
Starting with your immediate network is fine, especially if this is your first hire and you expect to have a very small team for now. Just be careful about building a homogeneous team who all share your experiences and perspectives—and be mindful that limiting how and where you recruit could result in EEO violations, too.
Job boards and recruiting agencies (or talent acquisition firms) are ways to reach a broader pool of candidates but don’t jump on them automatically. Balance the costs against the time saved and the potential benefit they bring to your hiring process.
You might want to work with a recruiter if you’ve tapped all the resources in your own network or company for connecting with fitting candidates, you have a need for quickly hiring for a lot of roles at once, you’re looking for an unusual set of skills or you’re building a team outside of the region or country you’re familiar with.
If you plan to post to job boards, you might immediately think of the most popular job boards, because they’ll help you get in front of the most candidates (or because you can’t get their podcast ads out of your head …). But if those sites aren’t actively taking steps to serve diverse job hunters, you run the same risk of reaching only a homogeneous pool of candidates.
Consider job boards designed for specific communities, both to ensure you reach those communities and to demonstrate your company’s commitment to equity. Here are some diverse job boards:
- Hire Autism
- Black Career Network
- DiversityWorking
- Recruit Disability
- Pink Jobs (LGBTQ candidates)
- We Work Remotely
- Career Contessa (female talent)
- Female Executive Search
- 70 Million Jobs (candidates with criminal records)
- Hirepurpose (military spouses, veterans and service members)
Review Applications
If you created an attractive job ad and posted it in all the right places, you might find yourself with a good problem: how do you vet them all?
A good problem to have, but a problem nonetheless.
Technology can help a lot, but people have been raising questions about the legal and ethical repercussions of artificial intelligence (AI) in hiring. As with AI, hiring algorithms tend to carry all the biases of the humans who designed them, and you might not even realize who you’re screening out.
If you use automatic screening programs, follow these tips from Forbes Nonprofit Council member Eric Reicin to head off algorithmic bias:
- Be mindful about the criteria you enter, to avoid bias and illegal discrimination
- Audit your tools regularly to sniff out room for bias
- Notify applicants that you’re using AI to sort their applications, so they know “who” they’re writing for
Whenever applications land on your desk, look for these signs of a candidate’s potential:
- Ability to identify the problem your company and the role solves
- Which achievements they showcase and how
- Accurate and complete applications without excessive errors
- Their connection to the company’s mission
- Their personality!
- Patterns in past job experience
- Signs of innovation and potential for growth within the company
Remember: None of these needs to make or break a candidate. If a candidate seems great but their application raises some questions, note those questions to address at the interview stage.
Interview and Screen Candidates
After the application, your hiring process could include a screening call, interview(s) and a skills test, depending on how much you need to know about the candidate for the role.
Approach each of these stages with a clear understanding of what you and the candidate can glean from it. If you can’t name those, cut them from your process.
Forbes Coaches Council member Nick Leighton suggests these questions to get to know a candidate during an interview:
- What are you looking for in a company?
- How is your experience/skills relevant to the position?
- What are your long-term goals?
- Why are you looking to leave your current job? Why did you leave your last job?
- What are your strengths and weaknesses?
- Do you have any questions for me?
- Again, keep an eye out for areas of conversation that could introduce bias or discrimination into your hiring decisions.
You can’t directly ask about a candidate’s race, skin color, religion, gender identity, sexual orientation, pregnancy or parenthood, national origin, age (40 or older), ability or genetic information. And you should avoid lines of questioning that require candidates to reveal this information, such as asking about their home lives, where they’re from or when they graduated college. Stick to the job requirements and the candidate’s work experience.
Extend an Offer
Once your recruiting process has narrowed down to the right candidate, extend an offer!
Follow these job offer tips to determine the salary and benefits package, have a candid and transparent conversation, explain everything included in the offer and prepare for special requests from the candidate.
Onboarding Your New Employee
This is the fun part—welcoming a new member to your team. If you’ve worked with contractors to this point, you may have a solid system in place for onboarding new team members into your culture and processes. With employees, that’s just half the battle.
Employees come with more complex legal requirements, so your back office is going to be a little busier onboarding them. For each employee, you have to have on file a Form I-9 (eligibility to work in the U.S.), Form W-4 (tax withholding) and required state tax withholding forms. And you need to have a system in place for filing those taxes with payroll, as well as for collecting direct deposit information and authorization if that’s how you pay employees.
Work with an attorney to make sure you meet all your state’s requirements for new hire reporting, as well.
If you offer benefits, your onboarding process should include a clear explanation of employees’ options and directions to sign up within the required timeframe.
Payroll and HR Services Can Help
Thankfully, you don’t have to become an expert in payroll and HR processes if you want to run a small business. Payroll software can do a lot of the heavy lifting for you, including collecting the necessary forms and authorizations, benefits onboarding and automated payroll that includes tax filing.
If you’re moving from a one-person company to your first one or a few hires, you can probably get by with the software and a part-time HR generalist. As your company grows, a dedicated HR employee or team will become necessary to manage the employee experience, field questions and audit automated processes.
