Hiring Your First Employee: When and How to Do it Successfully
Hiring your first employee is the first step in growing your business. But it’s hard to know when it’s the right time or where you should even begin—and it’s a big decision you want to get right.
We can help you do that. Here are the steps you should follow and the things you need to know before you put up a “Help Wanted” sign.
When should I hire my first employee?
These are just a few signs you might be ready to hire your first employee:
When you’re unbelievably busy
Your business is growing faster than you can keep up. You’re turning away new clients, you’re feeling overwhelmed and overworked, and you’re putting in overtime to get it all done.
But before you start writing a job ad, ask yourself—is this growth consistent and not just a small seasonal blip in demand? Is there enough work to keep a new employee busy long-term?
If you’re working year-round, this could be a good sign that you’re ready for a permanent employee. If demand is seasonal, you might be better off hiring an independent contractor for the busy months.
READ MORE: Employee hiring and engagement tips from 6 industry experts
When you have enough money
Maybe your revenue has been climbing for the last 6–12 months and still has room to grow. Or maybe it’s peaked because you don’t have the capacity to take on any more work right now.
Whatever your financial situation, you should be able to handle the extra cost of a new employee, including wages, taxes, and benefits.
It’s also a good idea to have a small nest egg in your business bank account just in case your clients haven’t paid their invoices by payday.
GET PAID FASTER: Follow up on overdue payments with these templates
When you have the time
It takes roughly 8–10 weeks to find a new hire. You also need several more months to train the new employee to do the job independently (and train others in the future themselves).
It might not feel possible to spend that much time on hiring when you already don’t have any to spare. And what if it doesn’t work out, you fire them, and you have to start again?
This is one ingredient you can’t skip, so set aside the time it’ll take to properly find and onboard a new hire. That’s the best way to get value out of your employees—and not have them cost you in the long run.
If it’ll help your business expand
Hiring another employee is a good idea if you’re looking to provide a new service to your clients—for example, you’d like to offer weed control as well as lawn mowing.
It’s also smart to hire someone with a specific skill you don’t already have. If your new lawn care employee brings the capacity and the skill set for weed control, over time they may even pay for themselves.
READ MORE: The Home Edit shares 22 tips for organizing your business
What do I need to know before hiring my first employee?
There are several questions you need to answer before hiring your first employee:
- What position are you hiring for? You might need someone in the truck with you, or you might just need a virtual assistant to handle admin tasks. Whatever role you want to fill, make sure you’re clear on their role and responsibilities up front.
- Will they be full-time or part-time? Figure out up front how many hours you’ll be giving your new employee. This is important to know at tax time, but your future employee will also need to know what to expect in terms of scheduling and wages.
- What type of employee will they be? For tax purposes, you need to classify the new hire as a common-law employee or an independent contractor. There are other employee types, but these are the most likely options for your home service business.
- How will you pay them? Decide how often you’ll pay your employee and what their starting pay will be (as long as it’s above minimum wage). Payment structure can vary depending on the role, the kind of work you do, and how your clients pay you.
- What benefits will you offer your employee? Benefits, incentives, and bonuses are a proven way to attract employees and keep them around. Decide if you’ll offer health insurance or a 401(k), as well as other benefits and incentives like vacation and personal days.
- Are you ready to be an employer? You might feel mentally ready, but it’s important to be legally ready, too. Read up on the Fair Labor Standards Act (FLSA) for information about wage payment, time tracking, record keeping, tax payment, and more.
READ MORE: What is a virtual assistant and how can they help your business?
How do I prepare for hiring an employee?
There are several legal and logistical hoops you’ll need to jump through before hiring your first employee. We’ve outlined the important ones below.
If you have any questions, always talk to an employment lawyer—they’ll help you navigate the ins and outs of your local labor laws.
READ MORE: Stan Genadek’s top 7 small business hiring tips
Do your tax paperwork
Apply for an employer identification number (EIN) through the IRS, then register with your state labor department so you can pay unemployment compensation taxes.
There are a few forms you’ll need to know about at tax time, but these are the big ones:
- Form W-4: It’s your job to handle social security, Medicare taxes, and federal income tax withholding from the employee’s paycheck. You’ll file this form and deposit the funds with the IRS.
- Form W-2: This form reports annual wages and the social security payroll taxes (FICA) you withheld. You’ll need to provide it to your employee every year so they can file their tax returns.
These forms are specific to the U.S., so there may be different employment tax requirements in your area. Plan to keep all of your tax records for at least four years.
If you live in the U.S., you’ll also need to report the new employee’s information to your state’s new hire reporting agency. You don’t have this information yet, but be prepared for it!
READ MORE: 30 small business tax deductions to save money when filing
Get a payroll system
As an employer, you’re legally required to track a certain amount of employee information. Set up a payroll system to help you keep accurate records of required tax information like:
- Employee’s full name and social security number
- Address (street, city, state, zip code)
- Birth date (if 18 or under)
- Workweek (starting day and time)
- Daily and weekly hours worked
- Employee wage structure and rate
- Daily and weekly wages
- Pay period wages
- Pay period and dates
- Weekly overtime earnings
- Wage additions and deductions
Depending on where you live, you may or may not be required to provide your own workers’ compensation insurance for workplace injuries. But even if it’s not necessary, it’s still recommended.
You can choose short-term (12–52 weeks) or long-term (over a year) coverage. The waiting period for each type is different, and your premiums will be, too.
Read up on FMLA to make sure you’ll be compliant with federal law around unpaid, job-protected leave.
Prepare for their first day
- Write an employment contract or at-will agreement that you can duplicate for any future hires. Get a lawyer to look it over and make sure it complies with local labor laws.
- Assemble a first-day package with the contract, an employee handbook, a personal data form, and federally required details about disability, family leave, and other important policies.
- Write down all your processes in the form of standard operating procedures. This will help your employee provide the same quality of work that you already do.
- Get familiar with the Occupational Health and Safety Act (OSHA) and set up your own occupational safety program.
- If you have a physical location, put up the required federal posters about worker rights.
- Order an employee uniform to wear out in the field. You can also order casual swag items, like a hat or shirt, so they can choose to rep your brand during their downtime.
How do I hire my first employee?
When you’re ready to hire, start with a job description and job posting. Then interview applicants, check their references and background, and make them an offer. Here’s how to do it.
Write an appealing job description
A job description should tell potential candidates if the job is likely to be the right fit for them. This means you need to be as accurate and detailed as possible without being overwhelming.
When you’re writing a job description, make sure to include:
- Company overview
- Position summary
- Personality characteristics
- Job requirements
- Additional information candidates should know (e.g., background check, drug testing)
- At least two references
- How they can apply (e.g., email, web form, through the posting)
READ MORE: How to build a business where employees want to work
Advertise the job
Your job description is ready—it’s time to share it with the world! But where do you find people who will not only see the posting, but actually apply for it?
Try these tips for finding potential employees:
- Post the job on social media (Facebook, LinkedIn) and job sites like Indeed. Don’t be afraid to back up the posting with an advertising budget!
- Attend job fairs or recruiting events for trade schools.
- Visit big box stores, approach employees who are working hard, ask if they know anyone looking for a job, and give them your job ad or business card.
- Check with friends and family to see if they’re interested. Just make sure you can set expectations and keep the relationship intact if things don’t work out.
The advertising process will get easier after hiring your first employee. If you start an employee referral program, your team will be able to recommend new hires they think would be a good fit.
READ MORE: Get expert hiring tips from Nick Huber (The Sweaty Startup)
Interview the best candidates
When the applications start coming in, sort through and choose people you’d like to interview. They should have either similar experience or a history of hard work and willingness to learn.
Remember, they don’t have to be perfect for the job—you’ll be waiting a long time if you’re looking for exactly the right person. It’s okay to hire someone good and train them to be great!
Once you have your list of candidates, schedule interviews and come up with a list of questions to ask a new employee. Ask everyone the same questions so you’re getting a fair comparison.
Don’t ask about ethnicity, origin, religion, age, gender, sexual orientation, family or marital status, health, appearance, or pardoned offenses. The candidate can choose to share that information, but asking could be seen as discrimination.
READ MORE: Build culture with Kristen Hadeed’s team-building activities
After the interviews, ask your top two or three candidates if you can contact their references. This gives the candidate time to inform their references that they’ll be hearing from you.
Then pick up the phone, double check that they’re still available for a quick discussion, and get ready to ask questions related to job performance, like:
- When did this person work at the company?
- What was their role and list of responsibilities?
- How reliable would you consider this person?
- Where did the candidate excel?
- Where could they have improved?
- How would you describe your work culture? Did this person thrive in that environment?
- Would you recommend this person for a job?
- Would you hire this person again?
This process may take a day or two, depending on how available their references are. That’s partly why it’s a good idea to give references advance notice that you’ll be reaching out.
READ MORE: Retain employees with continuous feedback
Run a background check
You might decide it’s appropriate to run a background check before you hire an employee. This confirms a candidate’s employment history and driving record, but it can also turn up a criminal history within the last seven years.
You can also ask the candidate to take a pre-employment drug test, as long as they know in advance that it’s part of the hiring process. This is important if they’ll be using heavy equipment.
If you plan to run a background check or drug test, include that information in the job description and notify your candidate in writing when it’s time.
You should file Form I-9, the employment eligibility verification form, with immigration services. This will confirm the candidate is allowed to work in your area, if they aren’t a citizen of your country.
Make an offer
You’ve found a good candidate, their references love them, and the background check clears. You’re ready to make them a job offer!
Contact the candidate and make them an offer in writing, including hours, wages, and proposed start date. If they accept, get their signature on the offer letter and plan for their first day.
There’s a lot to do when you’re hiring your first employee. It might even feel a little intimidating! But once you’ve made your first hire, any recruiting afterwards will be much easier.
If you follow these steps, you’ll be building a foundation for your hiring process—and you can keep improving it as your team grows.
For more advice on hiring new employees, hear from home service experts in this episode of Ask a Business Mentor:
Originally published June 2016. Last updated on November 2021.