How to Hire Employees

A comprehensive guide to hiring employees in the U.S.


November 9th, 2020

Whether you are looking to hire your first employee or expand your staff numbers, there are a few things to consider before you get started. As well as ensuring you attract and hire the right candidates, you also need to make sure you comply with state and federal employment laws.

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How to Hire Employees - Checklist

Use our PDF hiring checklist as a guide for hiring new employees.

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How to Hire Employees:

1. Get an Employer Identification Number.

Before you hire employees, you will need an Employer Identification Number (EIN). This is like a Social Security number for your business which you will need in order to pay state and federal taxes. You may already have an EIN if your business is registered as a partnership or corporation.

2. Set up your employment tax records.

As an employer, you are required to keep your employment tax records for a period of 4 years after filing. Well-organized records will make it easier to prepare your tax returns and track business growth.

Employers are responsible for completing and filing a W-2 federal wage and tax statement form for each employee. The form must be given to your employees and Copy A should be sent to the Social Security Administration by the end of February each year for wages and taxes withheld from the previous year.

Most states also have a state withholding form that must be submitted annually. Check your state requirements and find the forms you need.

3. Define the role.

Before you start the hiring process, figure out what type of support you need first. Make a comprehensive list of all the tasks that you will need your new employee to perform. Then consider the responsibilities you will want them to take on when they start, and in the future.

From this information, you can figure out whether you will need a part-time or full-time employee and what employee skills and experience would best serve the role. Then create a list of job requirements to get a clear picture of what you should put in your job description.

4. Create a compensation plan.

Once you have clearly defined the role, you can put together a preliminary compensation package in line with industry expectations. If you are hiring your first employee, be sure to check out our complete guide.

5. Define your employee benefits.

Employee benefits play a significant role in attracting and retaining talent. Some employee benefits are required by law while others are at the discretion of the employer. The type of benefits you offer may depend on the number of employees you are planning to hire and what you can afford.

Required benefits

  • Social Security taxes - Employers are required to pay social security taxes at the same rate as their employees.
  • Temporary disability insurance (TDI) - Only required in California, Hawaii, New Jersey, New York, Rhode Island, and Puerto Rico.
  • Workers' compensation - Employers are required to provide workers' compensation for all staff members.
  • Unemployment insurance - Unemployment benefits vary by state. Check your state here to see what programs are in place.
  • Leave benefits - Leave stipulated in the Family and Medical Leave Act (FMLA) is required by law. All other leave is at the discretion of the employer.

Voluntary benefits

Supplemental benefits are employee benefits, products, or services provided by the employer but fully or partially funded by employees at a reduced group rate. A few examples of voluntary benefits include:

  • Car insurance.
  • Life insurance.
  • Supplemental medical insurance.
  • Dental insurance.
  • Disability insurance (if not mandatory).
  • Vision insurance.
  • Homeowners insurance.

6. Set up a payroll system.

Before you hire your first employee, you will need to set up a payroll system to pay them and process taxes. You have the option of doing payroll yourself using free payroll software or you can outsource your payroll to save time and ensure compliance with government regulations.

7. Write a job description.

A job description is not a job posting, but rather a description of what the successful candidate will be doing in the role. It should include essential tasks and skills as well as a list of qualifications. Check out our guide on how to write a job description to get you started.

8. Advertise your job opening.

Advertising your job opening is one of the most important parts of the recruitment process. If you want to attract the right candidates, you will need to advertise on multiple platforms. Posting on social media is a good way to start if you have an active social media profile for your business.

Posting your ad on job boards is another great way to attract top talent. Use our job posting template to easily create a posting that will speak to your audience. If you have a company website, you can also post your job ad online and use structured data to ensure it is indexed by Google for Jobs.

9. Send a screening email.

Once your posting is out, you should start receiving some applications. The easiest and most effective way to deal with the flood of applications is to send out a screening email to each applicant. Your email can be a simple "Thank you for applying" letter with next steps, or a passive screening system with a few questions about the job to weed out unqualified candidates.

10. Conduct remote screening interviews.

Once you have narrowed down your list of candidates, you should conduct a short phone or online interview with each candidate to confirm their credentials and get a general sense of them as a potential employee. After this initial round of interviews, you should have a good idea of who to invite for a final interview.

11. Run a background check on potential candidates.

Before you conduct full-length interviews with top candidates, it is a good idea to run a background check to confirm employment history, current and previous address, and check criminal records. Always obtain permission from candidates before making use of a background check service or conducting your own background check.

12. Conduct full-length interviews.

At this point in the recruitment process, you should have a final list of candidates with the right skills and experience to do the job. By conducting a full-length interview, you can expose potential red flags, reveal the candidate's strengths, and ensure the candidate is a good fit for your company.

13. Do a paid test.

After the final interview, you may want to conduct pre-employment testing or test out your candidate on the job before you make an offer to hire. Doing a paid test has become common practice in many industries as it gives you an accurate idea of what the candidate is like in your work environment. Ideally, you will want them to be doing tasks that are representative of their daily duties, although this may only be possible once they have undergone orientation.

14. Make an offer of employment.

After conducting final interviews and doing a paid test, you should have a final candidate list. Now it is time to make an offer of employment. If they accept your job offer, send them the employment contract to sign and new hire forms to complete for their first day on the job.

15. Check for eligibility to work in the U.S.

It is your responsibility as an employer to ensure that all of your employees are legally allowed to work in the United States. If you hire someone without employment eligibility, you could face a hefty fine or criminal charges.

Employment eligibility is confirmed when an employee fills out an I-9 Employment Eligibility Verification form before or on the first day of work.

16. Report your new hires to the state.

Federal law requires employers to report all new hires. If you hire a new employee or rehire a former employee, you are responsible for reporting your new hire to the state. The information is used by child support agencies to issue an income withholding order to a parent owing child support.

17. Obtain workers' compensation insurance.

The requirements for workers' compensation insurance varies from state to state. Most states require employers to obtain an insurance policy for workers who become ill or are injured during normal duties. Workers comp ensures that workers get medial attention and compensation for a portion of lost income if they are not able to return to work for a period of time.

18. Display workplace posters.

The department of labor requires that all employers display notices in the workplace informing employees of their rights. These posters can be obtained online free of charge and must be printed out and clearly displayed throughout your workplace.

19. Conduct orientation.

When your employee arrives for their first day of work, you will most likely need to conduct orientation to integrate them into the workplace, introduce them to their work colleagues, and fill in any outstanding paperwork. Employee onboarding procedures will continue for up to 30 days, or until the employee is fully integrated and working to a satisfactory standard.

20. Follow all federal and state labor laws.

If you are hiring your first employee, make sure you comply with state and federal labor laws governing wages, health and safety, benefits, and unions. Failure to comply with employment laws is a federal violation and could result in legal action against you by your employee.

21. Report payroll taxes to the IRS.

When you pay your employees, be sure to deposit and report your employment taxes to the IRS. Payroll software and service providers can automate the process to ensure you remain compliant.


The Cost Of Hiring An Employee

How much does it cost to hire an employee?

The average cost of hiring an employee is $4,129.00, according to a SHRM survey. Costs for individual employers who participated in the survey ranged from $500.00 for the lowest quarter, to $4,500.00 for the highest.

Can an LLC hire employees?

Yes, an LCC can hire permanent employees and independent contractors.

How can I hire an employee with no money?

  • Offer stock in your business.
  • Hire interns.
  • Employ contractors, part-time workers, or students.
  • Exchange work for services.
  • Ask close friends and family for assistance.

How do you attract new employees?

Start with a job posting template to help write a posting that really works, then check out our guide to free job posting sites to get the word out to a broad audience.

How do you attract good employees?

This can depend on the job a bit, but the method outlined above should give you a good template for hiring great employees. Above all, find ways of testing their skills for yourself, rather than relying on interviews and resumes. Involve other staff as well, so that you can get more feedback on your hires, and they can learn how to start hiring employees too.

Can a single-member LLC hire employees?

Yes, an LCC can hire permanent employees and independent contractors.

What is included in new-hire paperwork?

You will need I-9 and W-2 forms, at a minimum. Check out our complete list of new hire forms.

How can I hire an employee quickly?

How do I hire more employees?

Once your business grows, you will expand your team by going through the same process you initially employed to hire your first employee.

How do I find the best employee?

The method above should give you a good template for hiring great employees. Find ways of testing their skills for yourself, rather than relying on interviews and resumes. Involve other staff as well, so that you can get more feedback on your hires, and they can learn how to start hiring employees too.

How do companies hire employees?

This varies from company to company, but typical steps in the hiring process include: - Writing a job description. - Starting the recruiting process by posting your jobs to social media and more. - Posting your job on job posting sites - Sending your candidates a screening email. - Doing short phone screening interviews. - Doing a paid test. - Conducting full-length interviews. - Making an offer, hire, and doing orientation.

How do you hire employees effectively?

The method we recommend should give you a good template for hiring employees effectively. Test their skills for yourself, rather than relying on interviews and resumes.

How do I find an employee?

Write a job description, start the recruiting process by posting your jobs to social media and post your job on job posting sites.

What should I look for when hiring someone?

Once you've got some solid candidates lined up, start inviting the best of them to do a paid test of their work. What this paid test entails can vary quite a bit, but it's doable for almost any job. Ideally, they'll be doing the real, day-to-day work of the job.

Can a sole proprietor hire employees?

Yes. Even though sole proprietorships technically aren't business entities, they can hire employees.

How do I hire a part-time employee?

The process of hiring part-time employees is no different from hiring full-time employees.

How do I hire an employee for a startup?

You'll want to find people that are suited to the day-to-day life of a startup. This means they're flexible, self-motivated, can work with limited supervision, and can handle a little chaos. If your candidates haven't worked at a startup before, look for candidates with previous jobs that required a lot of self-discipline with low supervision and high expectations.

How do small businesses find employees?

To find good employees for your small business, you should write a job description, start the recruiting process by posting your jobs to social media, and post your job on job posting sites.

How do I hire employees online?

Start with free job boards as a way to get the word out widely and effectively. This is a good way to keep the cost of hiring an employee down. You can do interviews with Skype or Google Hangouts, and all the paperwork you need can be sent electronically these days.

How do I hire new employees for seasonal work?

It can be tough hiring year after year for the same jobs, but at the same time, you get to practice and learn how to hire employees effectively. Follow a hiring process, and note when you make changes to it to see if your changes improve hiring. If you're having trouble getting applicants, check out our guide to finding employees. It also has tips on how to hire seasonal employees.

How much would it cost me to hire an employee for the first time?

There shouldn't be too much extra cost for hiring your first time. Keep in mind that the biggest cost to worry about overall isn't the cost of finding the right person, it's the cost of hiring the wrong one. It may be better to hold off on making a hire than bringing on someone you're unsure of.

How do I hire an employee for a job I don't know very well?

If there's anyone in your company that does know the job, get help from them. If possible, do the job yourself for a while. If you can't do that, try hiring contract employees to do some of the work until you get an idea of what success looks like for the job. Also, learn as much as you can from people you interview about who they respect in the field and why.

How long does the hiring process usually take?

This can vary quite a bit regionally and by industry, but in the last few years, it's taken a record amount of time to hire new employees, with an average of around 25 days.