Hire the right person for the job
To make life easier, here are 11 steps to help with hiring employees. You can also read more in our Hiring guide.
1. Create a clear job description
Make sure you are clear about the type of person you want to hire, the skills they require and the amount (or the range) you are willing to pay. Throughout the hiring process, keep an accurate record of each candidate, including their strengths, weaknesses, expectations and interview notes. You’ll need to refer to this again when selecting your preferred candidate.
2. Determine who is doing the recruiting
How much time will it take to recruit each new employee? Think about all the tasks involved including:
- writing the job description
- advertising the job (online and offline)
- communicating with prospective candidates
- answering questions about the job and your business
- interviewing and screening applicants
- communicating with unsuccessful candidates
You may not have time to do all of this. It might be more efficient to outsource some or all of these steps to someone in your team or a recruiter.
3. Ensure each employee provides certain information for your records
4. Maintain accurate tax records
Keep all records of employment taxes for at least four years after filing the 4th quarter for the year. It’s important that you keep them safe, secure and easily accessible. Your payroll software should be able to do this for you.
5. Understand your obligations
In many cases, your new employees may not understand all the things that need to be done unless you help them out. Don’t expect them to already know everything – even if they’ve had similar jobs in the past.
As an employer, you have certain tax and employment responsibilities for your staff. These responsibilities will be at a federal and state level. Talk to your accountant or check with the IRS and your state tax agency to ensure you understand your obligations and get everything right.
6. Remember key dates and tasks
There are so many things to remember when you’re running a small business. Your new employee should make your life easier. But when they first begin, you may find your workload increases while they are coming up-to-speed with everything.
A good way to remember some of the most important dates is by using some of the freely available online tools that let you sign up for reminders.
The IRS has a handy online calendar for businesses you can use for reminders. Check with state tax agencies also for their important dates.
7. Understand the rights of your employees
All employees are entitled to certain minimum rights under state and federal law. However, many employees may not be aware of their rights or understand them.
To help your employees out, you are required to display posters about employees’ rights in your workplace. You can find out more about the Department of Labor’s workplace poster requirements for small businesses and also download the posters you need.
8. Obtain workers’ compensation insurance
All businesses are required to have workers compensation insurance. This can be obtained:
- with a private provider
- via self-insurance. This is when you choose to set aside money from the business to cover compensation payments to your employees.
- through your state’s Workers’ Compensation Insurance program. Find out more about these programs at the Office of Workers' Compensation Programs (OWCP) within the Department of Labor.
Insurance is easy to forget – until you need it. When you’re running a business things don’t always go to plan. Think of it as protection now, should things go wrong in the future.
9. Set up a payroll system
Your options when setting up your payroll include:
- doing it all yourself
- outsourcing the setup to your accountant or bookkeeper
- outsourcing to a payroll service
Look for accounting or payroll software that:
- makes it simple to stay compliant
- can pay your employees efficiently
- files reports with the IRS and other agencies
10. Keep a file for each employee
It’s important to keep up-to-date and accurate records for all your employees so that you can use them to figure out their pay and entitlements. You will also need records to give to your employee or their union/representative, or a regulator if requested.
Each employee’s file should include their:
- full name, address and contact details
- emergency contact details
- tax details
- preferred payment method and details, for example direct deposit information
- any other important information about them
Consider using an HR system that includes these features. These records must be kept for at least seven years after the employee has left.
If you’re not sure about what information you can and should collect for each employee, contact your advisor.
11. Be clear about goals and expectations
Even if you have just one employee, it’s important that you define and agree on what is expected of them from day one. They should already have a good idea about this from the interview process.
The reverse is also true. Let them know what you will provide in return. This is a professional relationship and it should be based on mutual trust, respect and honesty. The better you treat your employees, the harder they will work for your business.
Your employees are your most valuable asset – choose wisely
Whether you’re hiring one employee or several, it’s important to follow the steps above. And don’t forget to think about how you will retain and reward excellent work. There are many ways to do this other than salary and wages, for example incentives and non-financial rewards.
Remember that your employees are your company’s most valuable asset. Good people are hard to find. And hiring can be time consuming and expensive.
If you get the process right, you’ll ensure you hire the right people. And if you look after your employees, they’ll stay with you longer and your business will perform better.
Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the content provided.
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