Your small business is all set up and running, attracting potential traffic, and the cash inflow is steadily rising. But so is the compulsion to get all the work completed with only two hands.
There are around 31.7 million small businesses in the U.S., and it takes about $4000 to hire a new employee. However, even after a hefty investment, 74% of the employers say they hired the wrong person for their company while spending around 17% of their daily time trying to fix the mistakes these employees make and end up losing up to $17,000 or more to hire employees for small business.
Now that the loss is alarming, the investment line is narrow, and it is difficult to cover up the losses incurred.
Here, we will tell you exactly how to hire employees for small businesses, so you can avoid falling into these common pitfalls that result in you incurring more losses than profit.
The article is divided into the following easy-to-understand sections to help you understand how to hire employees for small business:
How to Hire Employees for Small Business: Preparing the Base
- How to Hire Employees for your Small Business : Finding the Right Ones for the Job
- Hire Employees for your Small Business : Finalizing the candidates
- Hire Employees for your Small Business : Creating an Unrefusable Compensation Package
- How to Hire Employees for your Small Business : New Hire Forms Checklist
- How to Hire Employees for your Small Business : Create the Ideal Work Environment for them
How to Hire Employees for Small Business : Preparing the Base
Before diving into the act of hiring employees for your small business, preparing the groundwork that leads up to the decision is imperative. Here are some elaborate tips to hire employees for your small business:
Does your company have the capacity to hire new employees?
To hire employees for your small business, you need to make sure it ticks all the boxes before you hire.
- Curating a beneficial cost-benefit analysis
- Evaluate whether your small business is making enough gains to shoulder the burden of hiring a new employee
- Defining the exact role that the employees will take on post-hiring and whether they are in correspondence to the values of the company
All things put under the microscope, the objective of hiring employees for your small business is either based on skill, increasing capacity, or giving them tasks you don’t want to take care of. Whichever the motive, you must lay out the hiring objectives and then decide whether you should take on more people.
To hire employees for your small business, the process cannot start without procuring an Employee Identification Number (EIN), an identification number provided by the IRS that confirms your company’s payment receipts to your employees.
This number ensures that the IRS recognizes your small business and is legitimate to pay employees who work for you. Without an EIN for your business, it is difficult to proceed with any hiring process.
Here is How You Apply for an EIN
The application process for an EIN from the IRS is not as complicated as it sounds.
- Apply Online- You can do this on the IRS website. You will be asked a few questions regarding your business, including information on ownership, partnerships, sole proprietorship, and the like.
You also need to give them your Taxpayer Identification Number (Social Security Number, Individual Taxpayer Identification Number, Taxpayer Identification Number for Pending U.S. Adoptions, or Preparer Taxpayer Identification Number)
For more EIN information, the IRS website can guide you better.
- Fax/ Mail- Download the SS-4 form and put in all your information. After that, mail or fax it to the IRS.
- On-Call- You can simply attain your EIN by calling the IRS Business and Specialty Tax Line at (800) 829-4933.
Take Care of the Tax Requirements
Now that you have successfully banked the EIN, the next imperative step to take to hire employees for your small business is to venture through all the tax requirements:
- Start to report employment taxes that you have banked
- File Form W-2 for each employee.
- According to the IRS withholding tables, withhold taxes from your employees.
- Deposit your withholding.
- A part of Social Security and Medicare taxes needs to be withheld, and pay a matching amount yourself.
- You must withhold 0.9 percent Additional Medicare Tax on an employee’s wages and compensation on surpassing a ceiling amount.
Checking your tax requirements according to the IRS guidelines is detrimental to ensure you can move to the next step with ease. Additionally, you must contact your state’s labor department on an urgent basis to find any extra loopholes and laws that your small business is bound to follow while hiring employees.
Go Through all the Legal Procedures
Apart from fulfilling your tax requirements, there are a few other parameters you need to cross-check to hire employees for your small business.
Tax Form Collections
You need to collect two essential tax papers for your employees, the I-9 form, which guarantees that your employees can work in the U.S. The second important form is the W-4 form which contains all the necessary details of how much tax income you must withhold from your employees.
Reporting the Hire of your New Employee
There is a specific deadline to when you need to report the hiring of your new employee from the day they commence work at your business. After that, all you need to do is notify the recent hiring activity of the state board.
Securing a Worker’s Compensation Insurance
The next step to hiring employees for your small business is to ensure you get worker’s compensation insurance covering medical treatment, vocational rehabilitation, and the like. You can invest in this only if you get more than four employees onboard.
Advertising the Hiring
Once the boxes mentioned above are ticked, you can now focus on setting up advertisements and banners for your new opening.
Abiding by Local Laws Governing the Hire
Despite following the ground rules to hire employees for your small business, it is always safe to cross-check with the respective state laws under the Department of Labor.
Setting Up the Payroll Post Hiring
Curating a payroll for a small business is not a cakewalk. It is advisable to hire a payroll checker who can help you provide a profitable yet meaningful payroll to benefit you and your employees. A payroll provider can help you construct your payroll around existing laws and ensure that more practical work is done at half the price it would take for you to do the same all by yourself.
How to Hire Employees for your Small Business : Finding the Right Ones for the Job
Now that the initial formalities are out of the way, the next step to hire employees for your small business is to make sure your job opening is available for the right people to apply. Again, this process needs to be done with utmost ease and consideration, given that you wouldn’t want the job opening to fall under the eyes of candidates who are not suitable for the job.
Create the Ideal Job Description
Seek out an Appropriate Job Title
In a job seeker’s market, to try and bag the ideal candidate is a Herculean task in itself, but putting an attractive job title that defines specific skills should catch the attention of a few deserving candidates. For this, being keyword specific will do the right job for you.
Intricately Describe Their Roles for the Job
While hiring employees for your small business, keep in mind that job seekers try to look for detailed job descriptions to understand their daily roles. For instance, if your business is looking for web designers, specific job descriptions like ‘curating company value-based designs daily,’ or something even more specific to the job.
Describe the Benefits They Will Receive
While trying to hire employees for your small business, it is advantageous for your employees to know about their benefits from the company. For example, you must mention if your business provides complimentary snacks, wi-fi privileges, or travel allowances.
Use Online Platforms to Set Across Job Requirements
You need to post these descriptions on online platforms now that you have written the ideal job description to attract potential candidates. For instance, LinkedIn, Indeed, etc., are online platforms where the maximum number of potential job seekers surf for new jobs. Your new opening needs to reach them.
While you are at it, it is also beneficial to provide a window into what your small business represents and the values dictating it. These specifications will create a sense of connection to the candidates who can reflect through these values and strengthen their application chances. For instance, you should fill your LinkedIn profile should be filled and up to date, so when a candidate browses through it, they know exactly what to expect from your business.
Hence, building an online presence helps hire employees for your small business.
Hiring a Recruiter
It becomes even more stressful to run your business single-handedly. This can lead to a dilemma while hiring employees for your small business. Why not leave it up to the professionals? Hiring a recruiter will save you precious time, and let’s face it, they get your job done the right way.
Only take up this tip if you have enough investment at hand because hiring a recruiter can get pretty expensive, over $22,000 on average, depending on the industry. However, this investment is worth it because recruiters are experts who rightfully hire employees for your small business, resulting in higher ROIs in the long run.
Seek out Potential Employees on Private Social Media Group
Social media has become a powerful tool to hire employees for small businesses. Since we and job seekers alike spend most of their time aimlessly scrolling through social media, providing a job opportunity to them on such websites will ensure those job seekers come across the openings.
It is even a safer bet to advertise these openings on private social media groups such as Facebook that are made specifically for this purpose. This is because the job seekers are members of such groups and are already filtered out regarding their job skills and requirements. As such, it is easier to fish out the best candidates suitable for your job.
How to Hire Employees for your Small Business : Finalizing the Candidates
The next step in hiring employees for your small business is to finalize the candidate or candidates from the list of applicants. This is the most crucial part of the process where you must put on your thinking caps and complete who you want to recruit for the job opening.
Make sure that you follow through the steps carefully:
Adopt Successful Screening Techniques
This is probably the essential part of the finalization process, where you develop an effective screening process of the available candidates to hire employees for your small business.
An ideal screening process should include:
- The correct details on the cover letter as requested by your company. You must check if the candidate has met all the requirements on the cover letter itself.
- It is not crucial, but do look for potential spelling errors. If you notice several of them, this can mean that the candidate does not possess the ability to pay extra attention to detail. Haphhazardness shall not bore well with the ethics of your business.
- Check whether the contents in their resume corresponds to your company’s exact job description. If not complied with such details, you will be wasting precious time and money on such recruitments.
Conduct an All-Encompassing Job Interview
How you conduct the job interview will reflect on the candidates you finalize to hire employees for your small business. So, preparing questions that will give you an exact answer on whether you should hire the candidate or not is imperative.
Judging on their personality, values, and knowledge, you can formulate questions that can help you draw a clearer picture of the candidate. In fact, why restrict yourself only to interviews when you can judge their efficiency by taking them through a paid/unpaid trial period for you to take up a more rounded decision on the same.
Either way, skill should not be the only deciding factor in hiring employees for your small business. Skills without any work ethics are just like walking into a pole. It will only do your business more harm than good.
Ask Them Specific and Appropriate Questions
If you decide on sticking to the interview method, you must ask specific and appropriate interview questions to understand your candidate on a holistic level.
Hence, in case your business is looking for a detail-oriented person, it is crucial to ask questions like:
- What were your daily roles in your previous workspace?
- What is the reason for leaving the previous work?
- How did you get out of a helpless situation, and what would you do differently if they were to occur again.
Asking these intrinsic questions will answer most of your questions regarding your candidates’ demeanor and problem-solving and leadership qualities of your candidates.
Don’t just judge them on how they answer such questions. To hire employees for your small business, ensure that you observe their non-verbal communication skills and verbal ones. The holistic personality provides the small business with long-term prosperity and financial gain.
Be Prepared to Answer Their Questions
To hire employees for your small business, you must also be prepared to answer questions that the interviewee might have for you.
This is the chance you and your employee can create a ground of understanding each other and the job requirements. Building a successful business is a two-way street, where the employee’s thoughts and speculations are as crucial as the employer’s.
Either way, be ready to answer important questions that your interviewees may have for you and try to answer them in intricate detail, so there is no room for confusion.
Sign them Up
Sign up your potential employees once all the criteria mentioned above are met and you have successfully gone through the screening process.
Finalizing on how to hire employees for your small business is an excellent feeling of relief. But let us not stop our tracks. There are some final touches you must add to this to make the most out of the recruitment process.
Hire Employees for your Small Business : Creating an Unrefusable Compensation Package
You hired your dream employee who is ready to take on business the way you intended. What’s next? Provide them with a compensation package that gets them motivated and attached to the job.
While you curate this package, consider minute details that benefit your employee and your profit margins on having them aboard. To hire employees for your small business, there are specific pointers you must include to make your business an environment everyone wants to be a part of.
Determine How Much You Should Pay Them
Deciding on the exact amount you want to pay your employee depends on factors like:
- Market analysis of the job opening
- How much your business can afford to pay your employee
- The worth of value brought about by the new employee to the company.
All these factors help determine how much you should pay the new employee. Look at it this way. You are offering them a job that will over 50% of your work and will take away 25 hours of headache per week. So how much would you charge yourself in the situation? This speculation can help you decide a standard pay rate for your employees and make the process easier to hire employees for your small business.
Provide and Describe Benefits
Employees love to read the benefits section more than the possibility of a pay raise. They look for the depth of benefits companies provide to make their work-life a lot less hectic. Therefore, an integral step to hire employees for your small business is to provide them with benefits they will think twice to refuse.
While it is inevitable that small businesses such as yours cannot offer 24-carat diamond worth of benefits, the most minimal benefits also matter. For instance:
- Complimentary snacks and beverages in the office.
- Travel allowance.
- Free in-office counseling.
- Special discount codes.
- Gift delivery to their homes.
All these minute gestures work up to a pleasant employee experience at the workplace, so they would like to be a part of the business deeper.
An Offer Letter Agreement
An official template for an offer letter agreement will seal the deal between you and your employee on a deeper level, so it makes it easy to hire employees for your small business. This way, they will have a clear-cut idea of how to go about the company and what to expect out of it.
Here are a few standard things you can include in such an offer letter agreement:
- You must attach the compensation beneficiary to this letter along with the job title and the exact job requirements, all under one document.
- You should chalk out a detailed payroll schedule that should mention the payment cycle, on which day of every month you will make the payment, and through which medium. This should also contain a detailed guide on how the employee can raise their invoice.
- Mention the start date, office location, and work schedule in the offer letter for more clarity on the matter.
- Mention their managerial details. This includes their position at work and what they will be doing. However, if they are leading a department in the business, don’t mention it.
- Make sure to mention the employment conditions while creating the offer letter.
- Include a section for signatures for you and your employees to make it a binding contract between the two.
How to Hire Employees for your Small Business : New Hire Forms Checklist
When you wish to hire employees for your small business, you must get your documents double-checked before proceeding. As mentioned above, there are a few mandatory documents that need to be verified on an instance of a new hire, so let us get a closer look at these:
This is a crucial file that you and your employee must fill out during the hiring process. You do not need to send this document to anyone, but you need to keep this in your employee’s work file.
You need to fill out the I-9 to ensure that your employee can work in the U.S. After your employee clears the legal documents required, you can expect a go-ahead with this form.
This form includes the amount of money withheld from the employee’s paycheck as tax. If employees live in a state with income tax, they need to fill out an additional state income tax form. For more details on the same, click here.
This form proves to the IRS how much money you pay your employees. It is also a request form to procure the Taxpayer Identification Number from the IRS. This will provide more clarity while you hire employees for your small business.
File the New Hire Report
After you fill these documents, sign, and out of the way, you can finally submit this new hire report to the concerned authorities. Again, according to your state, there is a specific way to go about this process, so make sure you hit all the chords. This is one of the final steps to hire employees for your small business, and in a way, marks the beginning of the next phase of activities.
How to Hire Employees for your Small Business: Create the Ideal Work Environment for them
Give Your Employees a Blueprint to go through their First Day
Now that you have your employees on board, ensure they feel extremely welcomed on their first day of work. Give them an instruction manual on how to go about the first day of their work responsibilities and meet them when they are about to enter the office. Provide them with a proper parking space and add them to the company’s socials for a more inclusive approach.
Being one of them
Your employees should feel at home in their new workspace, and giving off a ‘supreme boss vibe’ won’t cut it. Instead, make them feel welcomed by spending time with them and engaging in deep conversations with them throughout the day. Maybe take them out for lunch.
The entire process might seem a handful to understand at a go, but after you struggle through your first hire, things will get easier with the hiring process as a whole. These tips will ensure you make the most out of hiring the right employees for your small business.
How Deskera Can Assist You?
As a business, you must be diligent with employee payroll system. Deskera People allows you to conveniently manage payroll, leave, attendance, and other expenses. Generating payslips for your employees is now easy as the platform also digitizes and automates HR processes.
- The objective of hiring employees for your small business is either based on skill, increasing capacity, or giving them tasks you don’t want to take care of
- To hire employees for your small business, the process cannot start without procuring an Employee Identification Number (EIN)
- While hiring employees for your small business, keep in mind that job seekers try to look for detailed job descriptions to understand their daily roles
- An integral step to hire employees for your small business is to provide them with benefits they will think twice to refuse
- When you wish to hire employees for your small business, you must get your documents double-checked before proceeding