02.27.2013

How to Hire Your First Employee

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So you’re ready to hire your first employee! Awesome! This is cause for celebration. Sadly, a lot of people are too busy being terrified to

What fear of commitment looks like
What fear of commitment looks like

celebrate. It’s understandable. An employee means payroll and taxes and legal obligations. An employee is a commitment.

So a lot of business owners think…”Maybe I’ll just get a contractor, instead. A contractor’s not a commitment.” But if you’re hiring a contractor to be an employee, a contractor’s not a contractor either. And you can wind up with an even bigger financial and legal problem.

No, if you’re ready to hire an employee, it’s just time to add a new skill set to your role as a business owner. And there are plenty of resources to help you.

Learn Your Responsibilities as an Employer

Information is the antidote to fear. I know it seems like there are a million things you don’t know about being an employer. That’s because there are a million things you don’t know. But you can get help, starting with the Texas Workforce Commission. They’re very friendly people and happy to help business owners become good employers.

Next Steps include:

  • Know the going rate: Research how much people are getting paid for the work you want done, based on education, experience, skill, geography and previous earnings. If you pick a number too low, you won’t attract candidates. Pick one too high and you’ll discover you’re paying way more than you had to.

 

  • How much money will you invest: Look at how much money is going to be invested in this employee. That goes beyond salary and includes payroll taxes like FICA—Medicare and Social Security taxes—and SUTA and FUTA, state and federal unemployment tax. You will also have to provide space, equipment and supplies. Don’t just ballpark it, get a realistic figure in mind.

 

  • How much time will it take: Evaluate how much time is going to go into this employee in terms of searching for the employee, recruiting the employee, training the employee and setting up and filing paperwork for the employee.

 

  • Write a job description: You need to write a job description that covers everything that employee is going to need to be able to do, and will be required to do, on a daily basis.

 

  • Get an application form and offer letter: This ensures a couple things. One, your application is going to be legal and not discriminatory. That’s important. Two, the terms of your relationship are set out in writing. Verbal agreements are friendly, but they don’t hold water and you need your relationship with your employee to hold water.

 

What You Don’t Need

You don’t actually have to have 401K and medical benefits to hire your first employee. You don’t have to have your employee handbook all written. You don’t have to offer paid vacation, sick days or holidays. With the first employee, a lot can still be communicated verbally.

You need to know the difference between what you can just talk about and what has to be documented according to legal regulations.

Valentine HR actually has a kit to make sure companies have what they really need. The Startup Package includes required forms, an employee file checklist, informational posters you are required to make available. We even have this kit in virtual form so you can keep it on your computer and share it with your employee. Also I’ll be at SXSW Interactive March 9 from 5-to-6 p.m. at Ask The Mentors in Startup Village at the Hilton answering questions about this and other issues of starting a company.

Yes, there’s a lot to know. But that’s what happens when you move up. It’s scary to build a company, scary to pitch to your first customer and scary to hire your first employee. But you do it, you learn, and it gets easier. Have fun with this. And congratulations!

By the way, ValentineHr can help walk you through the hiring process. We work with companies on a project basis or on retainer, providing a custom level of HR help designed for your business. Contact me at Caroline@valentinehr.com or call (512) 420-8267.

 

We work with companies on a project basis or on retainer, providing a custom level of HR help designed for your business, with offices in Austin, San Antonio, Dallas and Houston. Contact me at Caroline@valentinehr.com or call (512) 420-8267.