The BizFilings blog covering business tips and trends.
Hiring that First Employee
Published on Oct 22, 2009
Read our article, 'Hiring that First Employee' at 'Time to Start Up,' the small business blog by BizFilings.
Initially, most small businesses start out as a single person—the sole proprietor. Even if you started out as the second most common—a partnership—at some point you will need to add to your staff.
This is a good thing. It means you have reached a point with your business where you are busy enough, successful enough, and maxing out your current capacity enough to need help. But there are a couple of key things to think about long before hiring that first employee. It pays to address even a few of these ahead of time to avoid any issues that might arise if you wait and find yourself hiring someone quickly out of desperation.
1.) Have you incorporated your business? If you've been operating as a sole proprietor, you should really formally incorporate your business into an LLC or a C Corp, or whichever of the formations that suites your needs. In the process of doing this, get yourself a Federal Tax ID Number also called an Employer Identification Number (EIN)—it's like a social security number for your business. This is how the IRS will now recognize your company, and process things like income taxes in your payroll, etc.
2.) Do you have the right insurance? You should talk to your insurance agent about what your business obligations are in regards to Unemployment insurance, Workers Compensation, and OSHA requirements.
3.) Does your business or your employee(s) need any specific licenses? Make sure your business licenses are up-to-date, and if employees need to have any kind of certifications or licenses decide now weather or not they must have those prior to applying, or if you will pay for certifications/licenses. There are pros and cons to both.
4.) Consider your location. If you've been operating out of your house, hiring an employee can include bigger expenses if you need to now rent office space. But don't dismiss the "virtual office". With today's technology you can truly hire anyone from anywhere, and simply equip them with an internet connection, a laptop and a cell phone. This will also help widen your candidate pool if you are not restricted to recruiting from your own geographical area. Vice versa - if you run a store front or restaurant or have a physical location already - are you willing to pay relocation costs for an applicant?
5.) Bolster your company image now. Keep in mind it takes a pretty unique personality to want to work for a small or start up company. There are risks for that employee as well. No one wants to work for a company that seems unorganized, lacks in technology or forward thinking, or doesn't seem to have the potential for growth. It might be hard to do, but turn yourself around and take a good look at your company the way a potential applicant might be looking at it - would you work here?
It might seem like a lot, but these just scratch the surface of the things to consider. Just remember that getting your ducks in a row well before you max out your workload capacity and send out the hiring sign will pay off tenfold in the long run.