March 21, 2019    |    By

Hiring new employees can be a challenging process if you’ve never done it before, or if you’re simply unaware of what the correct hiring process is. There are a lot of steps you’ll need to take before you even make your first offer, including determining if it’s the right time to hire, making sure all legal obligations are met, and knowing where to find qualified candidates in the first place. This guide will provide step-by-step instructions on how to hire employees for your business.

Evaluating If It Is the Right Time to Hire

Before learning how to hire employees, determine when to hire them. If you hire employees you don’t need, it will end up hurting your bottom line, whereas if you wait too long to hire new employees, your current staff could become overwhelmed with their responsibilities, which can lead to all kinds of problems.

5 Signs You Need to Hire Employees

Five of the telltale signs that you need to hire new employees include:

  1. You’re getting more customer complaints than usual, which means the quality of your products or services are dropping (typically a result of an overworked staff).
  2. You’re paying more in overtime costs, which means your staff is working more than  usual to do the work that needs to be done.
  3. You keep having to extend deadlines because there’s too much work to be done and not enough staff to do it.
  4. There’s an increased demand for your products and services but you are being forced to turn down new customers because you can’t meet that demand.
  5. You haven’t been able to take a day off in a long time.


Benefits of Expanding

While you may have to hire new employees to alleviate an overworked staff, there are a number of benefits to expanding your staff as well, even if your current staff isn’t overworked. For example:

Focusing on Key Objectives

You are spending too much time on tasks that could be done by another employee. Bringing on new employees can help you free up time  that can then be focused on more important business-related matters. Owners should be working on their business, not in their business.

Setting the Right Perspective

Hiring new employees will often bring new perspectives and ideas. This can result in a much-needed injection of creativity and innovation that could improve business operations, help identify new opportunities, or simply help your existing employees see things from a fresh perspective.

Taking Your Business to the Next Level

Adding new employees to your team can help bring skills and experience that typically take years to develop. Such employees could help you to pursue new revenue streams and grow your company at a faster rate.

What You Need to Do Before Hiring – Handling Legal Obligations

If you’re a small business owner that has managed to handle your company’s responsibilities on your own up until this time, then the following steps will help ensure that you know how to hire employees by the book so that you don’t run into any legal compliance problems.

Employee Handbook/HR Policies

It’s not required by law to put together an employee handbook but it’s a good idea to do so. Your employee handbook should include all of your company’s employee policies and highlight that employment is at will unless a written employment contract was signed.

Obtain Workers’ Compensation Insurance

Workers’ compensation laws vary from state to state, which means it’s a good idea to look up the rules and regulations governing workers’ compensation in your state. You will need to purchase workers’ compensation insurance to ensure that employees are financially covered should they be injured or should they fall ill while they are on the job. This will also help protect you from employee lawsuits.

Selecting Your Payroll Method

You will need to implement some sort of payroll so that you can pay your employees on time and in full. There are several options that you can explore. Doing it yourself is not usually recommended since this would be a waste of valuable time that you could be using to focus on more important matters. One option is to outsource your payroll to a payroll company. If this is too big of an expense for your company size, then you can also use an online payroll service, which helps make the payroll process easy and convenient. Most online payroll services operate using the cloud and allow you to manage and run your payroll from anywhere. Such online services should allow you to pay full-time, part-time, contract, and freelance workers but you may find that you don’t get the same level of service you would from a local company.

Improve New Hire Onboarding Process

You will need to have some kind of new hire onboarding process that helps ease new employees into their jobs. An onboarding process should help employees to acclimate to your business environment more quickly as well as get a grasp of what their job is, how to do it, and how to follow your company’s specific processes. The better your onboarding process is, the quicker the employee will become a productive member of your staff.

Have Your Employer Identification Number (EIN) Ready

In order to hire employees, you will need to register your business with federal and state authorities so that you can obtain your EIN, which is a unique nine-digit number used for tax ID purposes (think of it as a Social Security number for businesses). If you don’t have your EIN yet, you can apply for one online. You’ll need to go to your state’s labor department website for information on how to do so since every state’s registration process is different.

Set Up Records for Withholding Taxes

Before you can start the hiring process, you have to fill out paperwork so that you can pay three types of withholding taxes. As an added note, make sure that you keep all employment tax records for at least six years to support employee tax filings. The following are three types of withholding tax forms you will need to fill out:

Federal Income Tax Withholding

When you hire an employee, they will need to complete a W-4 form, which is the employee’s withholding certificate form. This form asks the employee how much federal income tax they want to withhold from their pay. Once they fill this out, you will have to submit it to the IRS.

Federal Wage and Tax Statement

As an employer, it will be your responsibility to fill out Form W-2 for each employee that you have. This form details what they earn and how much taxes are withheld for the year. You will be required to send this form to your employees before January 31st covering the previous year. Copy A of their W-2 forms will need to be sent to the Social Security Administration by the last day of February. Keep in mind that if you’re hiring independent contractors instead of full-time employees, the process will be a little bit different (and will involve 1099-MISC forms instead of W-2 forms).

State Taxes

Not all states tax income, but for those that do, you will need to fill out the proper state tax withholding forms.

Making the Perfect Hire

Once you’ve handled all legal obligations and tax matters, you should be all set up to begin your employee search. When it comes to hiring new employees, remember to consider their fit within your company beyond their experience level and skill set. Maintaining a positive company culture is very important, after all, and you’ll want to hire employees who communicate clearly and who you can work with and trust.

Proper Research

Determine exactly who you need, and be specific about what skills you need your employee to have. Begin looking at job descriptions posted by other businesses that match what you’re looking for in an employee. This will give you an idea of what kinds of skill levels and experience you should look for as well. You should also pay attention to the compensation being offered by these businesses so that you know what to offer in terms of salary and benefits. If your offer is too low, you won’t get very many candidates–and they likely won’t be nearly as qualified as you need them to be.

Posting a Correct Job Title

It’s extremely important that the job title on your post is accurate. If it’s not, you’re going to end up getting a lot of candidates who may fit the title but don’t fit what you’re looking for. Make sure the job title isn’t vague either or you’ll have the same problem. Be specific when it comes to your job title and you’re more likely to draw the attention of qualified candidates. Avoid using buzzwords or trying to be too clever–job seekers are doing searches using specific keywords to find potential employment. You want to make sure that they find you.

Creating a Standout Job Description

Don’t skimp when it comes to the job description. Be descriptive–explain what the responsibilities of the job are, what the requirements for the position are, and what the compensation and benefits will be. Use popular keywords that are relevant to your industry and to the job title within the description. Write the description in a friendly and conversational yet informational tone.

Conducting Interviews

When going through applications, pull out the resumes of candidates who you think will fit the job. Set up a brief 15 to 30 minute phone interview with these candidates. This will give you the opportunity to see if they meet your basic job needs and whether there’s a mutual fit.

Interviewing Top Candidates

Choose the top candidates based on your phone interviews and schedule in-person interviews with them. Ask a series of questions that will help you determine the extent of their skills and qualifications as well as give you some insight into their personality. Be sure to ask them about their perceived strengths and weaknesses, why they’re interested in the position, what personal achievements they are most proud of and more. Pay attention to how they interact with you and to their level of enthusiasm. You should also ask them if they have any questions. Candidates who have thoughtful questions to ask have likely done some research and are not only more prepared for the interview, but are more interested in the position than those that don’t.

Check Their References

Always check the professional references that job candidates provide. You’d be surprised at how many people are willing to fudge the truth a little bit to get a job. Call  their professional references and ask about the candidate. Ask whether they were employed there, what their job was, how they performed at their job, and how they interacted with their coworkers and management.

Making an Offer

The in-person interview process should allow you to determine if a candidate is right for the job. Don’t settle if you don’t think any of them are a great fit. You can keep looking, after all. If you do find someone that you believe will be a good fit for your company, then it’s time to make an offer.

Offer Letter

Before you send an official offer letter, call the candidate and verbally extend the offer to them. Present the terms of your offer, which include the salary, benefits, start date, and more, and answer any questions they might have. If they accept the offer, send them an official offer letter.

Specifics – Benefits, Wages, Specific Role, Job Description, Start Date

The offer letter should detail all of the specifics concerning the position, including the official job title and description, the compensation and benefits, a statement of at-will employment, any guaranteed or discretionary bonuses that you might offer, a non-compete clause if you wish to include one, a confidentiality agreement, and the start date.

Notifying Rejected Applicants

Don’t forget to contact the applicants you interviewed both over the phone and in person to let them know that you’ve gone with another candidate. It can be difficult to have to reject someone over the phone, but they will appreciate that you’re upfront about it. Give them constructive feedback and wish them luck. If you don’t notify rejected applicants, you’ll start to foster a poor reputation as a company, which can hurt your ability to attract highly qualified candidates in the future. You might want to reach out to previous applicants in the future should you need to hire more employees.


Having trouble looking for employees? Click here for Where to Find Employees – Top 6 Employee Recruitment Methods

Make a great first impression at your next job interview.

This blog post is intended for informational purposes only and does not constitute legal advice. No attorney-client relationship is created between the author and reader of this blog post, and its content should not be relied upon as legal advice. Readers are urged to consult legal counsel when seeking legal advice.