Wondering how to hire new employees? Well, we’d be remiss if we didn’t offer our congratulations! Hiring employees is a huge step for small businesses, no matter the hire. Whether it’s a seasonal, part-time, or full-time employee, you deserve a high five. This is no small feat!
Which brings us here: what next?
To help you go from “help wanted” to “help hired,” we’ve come up with a short-totally-not-scary list of what to expect when hiring employees.
- Prepare to hire employees starting with an Employer Identification Number (EIN); registering with your state labor department; organizing your records for withholding taxes; setting up workers’ compensation insurance; and obtaining form I-9
- Research and outline the role you're hiring for
- Find your candidates
- Interview your ideal candidates
- Assess their backgrounds and employment eligibility
- Extend a job offer
- Report your new hire to your state employment agency
- Establish payroll for your new employee
And don’t worry—this list is just the tip of the iceberg. Keep scrolling from more rules, regulations, and tips. ⬇️
Why hire employees?
Like we mentioned above, hiring employees—whether it’s your first one or your first of many—is a big step for any size of business. Aside from the fact that you’re growing, it means that you’re being strategic. (Yes, you can give yourself another high five.)
For example: maybe you looked at your books from last summer to forecasted ahead, noticing that June to September were your busiest months. Perhaps in doing so, you had flashbacks of burnout and the subsequent sleepless nights, reminding you of your need for part-time assistance during peak periods.
And that’s just one example of why you might need to hire employees. Here are a few more:
- You or the employees that you already have are wearing many hats… and not just because you look good in them.
- Your employees are tired, calling in sick, asking for longer deadlines, or haven’t taken a break in months.
- Your customers are complaining because projects and deliverables are late or staff aren’t their chipper selves.
If any one of these signs seem familiar, consider adding to your team–legally and sustainably, of course.
When you find the right role and candidate to hire, you introduce the opportunity of bringing new skills to your team, freeing up yourself or your other employees to focus on what you or they should be doing. You can even give your business a fresh set of eyes to see things from a new perspective and identify new opportunities for growth (which you’d actually be able to tackle with another hand on board).
So, ready to find your next rockstar?
1. Prepare for hiring employees
While preparation is technically first on the list, it’s not a one-and-done step. That’s because hiring takes time: before and after you find your candidate(s).
But before we jump into the micro steps, here’s a quick glance at what you’ll need to check off your hire-help list.
Help wanted? Make sure you’ve got these items covered before Day 1:
- Get an Employer Identification Number (EIN)
- Register with your state labor department
- Organize your records for withholding taxes
- Set up workers’ compensation insurance
- Obtain Form I-9
- Create a job description that screams, “Hello, you should work here!”
Get an Employer Identification Number (EIN)
An Employer Identification Number (EIN) is a unique number that’s issued to you by the IRS. You might also recognize it by its other name: Tax Identification Number (TIN). Your staff will use this number when they’re filing their taxes and you’ll need it when you’re reporting and filing any payroll-related taxes, too. Psst: here’s how to apply. 🙌
Register with your state labor department
Every state is different, and this includes labor departments and state tax ID numbers. However, when it comes to taxes, many states use something called an Employer Account Number (EAN). Make sure you check with your state for the specifics by visiting their revenue or tax department, or ask a Wave Advisor. (We hear they’re pretty helpful!)
Organize your records for withholding taxes
“Withholding taxes” might be a phrase you remember from your pre-self employment days, but now that you’re hiring employees, the time has come for you to account for this must-do task.
To do so, there are three required forms:
- Federal Income Tax: This in relation to form W-4, which your new hire will have to fill out. It asks them how much federal income should be withheld from their pay, and then you’ll submit this form to the IRS.
- Federal Wage & Tax Statement that’s in relation to Form W-2, which you’re responsible for completing for every employee. This form reviews their earnings and taxes that have been withheld for the year. Copies covering the previous year must be sent to your staff (past and present), and then send Copy A of the W-2 forms to the Social Security Administration. That’s due by the end of February.
- State taxes which are in relation to state-specific withholding forms. Check with your state tax authority to obtain the specific form for the state your business operates in!
Set up workers’ compensation insurance
Accidents happen, which is why workers’ compensation is so important. It’s a type of insurance that can help you financially help workers who become injured while working for you.
Obtain Form I-9
The hiring process comes with its own set of rules, one of which is that each and every employee has to verify their employment eligibility using Form I-9 . In a nutshell, it says that “Yes, this employee is who they say they are and is able to work in the United States.” When hiring employees, you’re required to submit this form for every person you hire–US and non-US citizens included.
2. Research and outline the role you're hiring for
When hiring employees, you’ll want to make sure you have the right person for the job, but also the right job for your business. To get there, make a list of the tasks that need to be done, then research various roles to see what you should be hiring for.
Think about the experience you need and what that means for salary or wages, then look at similar job postings to get a sense of what yours should include.
Another tip? Be honest with yourself and the state of your business. For example, it might be easy to want someone with 10+ years experience, but if you make a list of tasks and duties and realize that 1 to 3 years would do just fine, consider going that route. It can save you big bucks in wages or salary, plus time in the future when your senior hire realizes they need a bigger pond to swim in.
Create a compelling job description
Now onto the job description. This should be clear, compelling, and accurate. Outline key roles and responsibilities of the role and come up with a job title that speaks to the role but stands out.
Pro tip: Unless it fits your brand, steer away from jargon, buzzwords, or fluff. For instance, instead of calling someone a “Numbers Ninja” stick with something tried-and-true, like “Accountant.”
Hey, you might think it’s boring, but it looks better on LinkedIn and on the job boards. Plus, it shows prospective candidates that you don’t just take hiring seriously, but also their career.
Because who knew that looking for a job with “Word Wizard” vs “Copywriter” on your resume doesn’t always translate? We did. 👋
3. Find candidates
When you’re hiring employees, finding candidates is one of the biggest steps on the list. It can take a while, but the search is worth it, especially when you end up with a list of candidates that you don’t know how you’ll choose from.
To get to that point, you can explore the three methods for candidate searching listed below.
Job boards and career websites
Job boards and career websites, like Indeed and GlassDoor, can be effective for finding a wide range of diverse candidates. You can think of these sites like online boards where candidates can explore postings and learn more about the companies that are hiring, and also where companies or recruiters can connect with future employees.
Used by employers and candidates alike, LinkedIn is touted as the world’s largest professional network on the Internet. People use it to search and find jobs, connect with other professionals, and keep up-to-date with what’s happening in their field. Business owners can use it as a way to connect and develop relationships with other entrepreneurs or potential candidates.
When posting your job description on Linkedin, you’ll want to do more than just list it. Use the website to make a post on your profile explaining your growth and the role you’re looking to hire, then ask for shares and connections. You might be surprised at what (and who) shows up!
If you’re looking to grow your business with a new hire, you’ve likely got a solid network around you that could help. Ask friends, family, and fellow business owners if they know of any suitable candidates. One of the best things about exploring your personal network? You might be able to get in-depth reviews of the candidates you’re interviewing from those who’ve worked closest with them, or know them personally.
4. Interview ideal candidates
Once you’ve got a list of candidates, it’s time to interview your potential new hires. If this is your first hire, don’t fret. Interviews are like a conversation where you’re getting to know each other, learn more about the role and your candidate's skill, and assess the fit. Remember, this is a two-way street. They’ll be doing the same for you, too.
Even though the interview is like a conversation, it should still be conducted in a way that gets the information you need from the candidate. To do this, go through their work history, asking questions along the way, like: What’s their preferred working style? How do they connect with customers and staff? What are their career goals?
5. Assess backgrounds and employment eligibility
Background checks are an important part of hiring employees. Not only are they there to make sure that your candidate is who they say they are, but that they’re legally able to work in the US.
This is where the I-9 is needed. Before your new hire’s first day, make sure that section one of Form I-9 is completed. This brings together their contact information, Social Security number, and confirms their employment eligibility.
Last but not least, get authorization for your background check. Your candidate must give you the green light to run it.
6. Extend a job offer
Found your next great hire? Amazing! Now it’s time to seal the deal.
To make this happen, you’ll need to put together and extend a job offer, and do so with excitement. Hey, this is a big deal–for you and the lucky candidate!
Before you put together the offer letter, consider picking up the phone to give the good news. This shows your new hire that you’re just as thrilled about the potential of them joining as them. Next, you’ll want to explain why you’ve made the decision. Did something stand out in the interview process? Were their references superb? Tell them. Feedback should always be welcome.
If you haven’t already disclosed or discussed pay, do that before the official letter goes out. This leaves time for questions, and gives you the opportunity to go into a bit of detail about perks like time off or coverage.
When preparing your new hire’s offer letter, you’ll likely send it over email. Make sure it includes the following:
- Job title
- Start date (and end date, if applicable)
- Type of work (permanent, part time, seasonal, etc.)
- Supervisor’s name
- Base salary
- Extra perks (like bonuses)
- Paid time off
- Benefits and coverage
- Legal obligations
- Response date (i.e., when they have to reply by)
Although you don’t want to send this before the initial phone or video call, it’s a good idea to have your offer letter prepared in advance. That way, you can move quickly and send it shortly after you’ve delivered the good news.
7. Report new hire to your state employment agency
Once your new hire has accepted their role, it’s time to report them to your state employment agency for tax purposes. Remember, every state is different, so make sure you follow the correct steps and fill out forms for your local state.
8. Establish payroll for your new employee
Now that you’ve hired employees, you’ve got to pay them. You can do that yourself, with an accountant, or with a service. No matter which way you go, the payroll process always comes down to three parts: paying your employees, paying payroll taxes–both to the IRS and to your local state’s tax agency–and lastly, filing tax forms.
Choosing which way to deal with payroll doesn’t have to be complicated. Lots of small business owners realize that adding another task on their to-do list isn’t something they’re prepared for, so they opt for a software, like Wave, that handles it all for them. “All” includes running payroll in minutes, handling direct deposit, generating T4 and T4A slips and summaries for tax season, and so much more.
Some may even say it’s the easiest part of hiring employees. 😉
After hiring an employee: The next steps
You made it! You went into full preparation mode, got your Employer Identification Number (EIN), registered with your state labor department, organized and obtained the necessary records, and then the fun stuff: researched the role(s), searched (and found!) candidates, conducted a stellar interview, and then did the heavy work. You know, background checks, extending the offer, reporting your new employee to your State Employment Agency, and establishing payroll to get them paid.
Phew, we’re out of breath just typing that.
So cheers to you, small-but-now-bigger business owner! You worked your magic and will continue doing so… with onboarding. We know what you’re thinking, “There’s more?!”
Short answer is yes. Long answer? Well…👇
Onboarding is a necessary part of the hiring process. It’s what helps take your new hire to new heights, acclimatizing them to your business and their job, and supports them in becoming a member of the team. (Even if that team is just you and them.)
Onboarding also helps you. It gives you an idea of your employee’s strengths, and where you can help boost their performance. And when done right, it can help create an environment that welcomes curiosity, questions, and new perspectives.
Onboarding your new employees can look different depending on the size and type of your business, but generally, it can start with a few things: a welcome announcement of the hire, formalizing HR and accounting needs, and a 30-60-90 day plan where you set objectives and meet with your new team member to make sure everything is going as it should be.
Which should be spectacular—especially if you followed this how-to guide. 😉
But if you do happen to hit a bump in the hiring or onboarding road, hit us up. Whether it’s questions about payroll, tax forms, or anything in between, Wave is here to help.
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The information and tips shared on this blog are meant to be used as learning and personal development tools as you launch, run and grow your business. While a good place to start, these articles should not take the place of personalized advice from professionals. As our lawyers would say: “All content on Wave’s blog is intended for informational purposes only. It should not be considered legal or financial advice.” Additionally, Wave is the legal copyright holder of all materials on the blog, and others cannot re-use or publish it without our written consent.