August 27, 2019

8 Steps to Take Before Hiring Your First Employee

Hiring your first employee is an important and exciting milestone for any business owner. However, you can’t jump the gun because there are several things you must do first.

8 Steps to Take Before Hiring Your First Employee: eAskme
8 Steps to Take Before Hiring Your First Employee: eAskme

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To protect yourself and ensure you are in compliance legally you will need to take these steps before hiring your first employee.

1. Get an EIN & Register with the State

As soon as you’ve decided you’re ready to bring on employees, you need to do two things: get an employer identification number (EIN) and register with your state’s labor department.

An EIN is necessary for submitting documents to the IRS.

Registering with the labor department will hold you responsible for paying unemployment compensation taxes which are then allocated to the state fund.

2. Purchase Workers’ Compensation Insurance

While it may depend on the number of employees you have and the type of business you run, employers are typically required to have workers’ comp insurance.

Workers’ comp insurance is essential as a protective measure should employees get injured on the job.

Even if you think you work in a fairly safe environment, you’d be surprised what can happen on the clock.

It’s better not to take the risk.

3. Set up Your Payroll System

To keep track of payments to yourself and one or more employees, you’ll need to run payroll at least once a month.

You’re also responsible for withholding Social Security and Medicare taxes from your employees’ paychecks.

Even if you’re only going to hire one or two employees, a payroll system will be necessary.

It might sound complicated but there are a number of user-friendly payroll software options that make it easy for your small business.

4. Find Reliable Background Check Services

You want to have every aspect of the hiring process hammered out before you even begin interviewing, including how you’ll process background checks.

To protect your business, background check services are an essential investment.

Every employee that you are planning to hire should undergo a background check before they sign any paperwork.

As a small business owner, you’ll likely want to find a full-service option that completes the investigation for you so you can focus your attention on more pressing matters.

A reputable background check company will also give you the peace of mind that they comply with the Fair Credit Reporting Act (FCRA) laws.

5. Prep the Workplace

There are certain required notices that need to be displayed in the workplace.

You can acquire them at no cost through the Department of Labor.

The specific notices you need to post will depend on your industry but will typically pertain to workers’ rights and responsibilities.

You should also make sure that your office or workspace complies with the Occupational Safety and Health Act (OSHA).

This includes providing a hazard-free workplace.

6. Create an Employee Handbook & Personnel Files

While these aren’t required by law, having them established can only benefit your business.

An employee handbook should provide a detailed explanation of your company policies.

It doesn’t have to be an actual book, just make sure it covers the most important information.

As for personnel files, these should be created for every employee as part of the on-boarding process to organize documentation that’s relevant to their employment.

At first, this may only include hiring and tax documents but over time could be critical in the case of a legal dispute.

You should use personnel files to keep track of disciplinary actions, injuries, and any other incidents, should they arise.

Both of these documents are meant to protect you.

7. Have the Appropriate Tax Forms On-Hand

There are several tax forms that are required when a new employee is brought on board, make sure you’re aware of them and have them ready when you’re going to begin hiring.

These include:
  • W-4’s
  • I-9’s
  • 940’s
You’ll also need to report each new employee to your state’s new hire reporting agency.


Because federal law requires it to keep track of parents who owe child support.

Typically, this needs to be done within 20 days or less so don’t let it fall off your to-do list.

8. Find an Employee Benefit Provider

If you choose to offer an employee benefits program, which can help in drawing talent to your business, you will need a system to manage it all.

Finding an employee benefits provider that covers all the bases (insurance, 401k, time-off requests, etc.) will make it easier to get employees enrolled.

Don’t get overwhelmed by these steps, it is easier to get your business ready to take on employees than it might seem.

If countless small business owners have done it, then you can too.

Take your time in doing your research and utilize the resources available to you to make the process as smooth as possible.

If you still have any question, do share via comments.

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