How to Hire Employees

Your business has grown and you've made the decision to find people to help you manage things. What now? Every business owner should follow this basic hiring process, whether adding the first employee, or the 100th:

Preplanning:

Are you really ready to hire? Make sure you do your due diligence first. Employees are expensive in terms of time and money, so make sure you truly have a need for a part or full-time employee. Be sure to look into other options such as outsourcing and temporary help first. If you need an employee, but your cash flow is somewhat unpredictable, you might want to consider hiring family members instead. Once you decide to hire an employee you will first need an Employer Identification Number from the Internal Revenue Service, assuming that you do business in the United States. You can reserve your EIN by calling toll-free 1-800-829-4933. For information on hiring employees in other countries, click here:
Australia | Canada | Nigeria | India | UK.

Employers must also obtain workers' compensation insurance coverage through an insurance agency.

You must have your employee complete and sign Form I-9 (from the Immigration and Naturalization Service) and retain that information in the employee's file.

Every new hire must complete a Form W-4 so that you can withhold the proper amount of income tax from each paycheck. You must also withhold Medicare and Social Security. It's important to remember, however, that you are just holding this money, and you must file IRS Form 941 (Employer's Quarterly Tax Return) and pay these taxes quarterly, so don't withhold this money and then spend it later! You will also have to match FICA (Medicare and Social Security). Managing these processes can be made simpler by using a Payroll Services Provider.

Recruiting:

Prepare a job description. This document contains a brief description of your company, the duties of the job, the job type - part vs. full-time, required qualifications & certifications, compensation range, application deadline, and required checks (such as drug, credit, criminal and/or reference checks.) Select & post the job description to several advertising sources (such as monster.com, careerbuilder.com, craigslist.com, local papers, professional organizations, etc.)

Review the applicant resumes. (Refer back to the job description to ensure that the resumes you tag for future contact match up with the qualifications you specified). Select the top five candidates for screening via phone.

Complete phone interviews. Select the top three candidates for in-person interviews.
Complete in-person interviews. Select the top candidate for background checks and/or drug testing.
Complete required checks.
If the top candidate passes, extend a verbal & written offer.
Once the candidate accepts, notify the other candidates that the position has been filled. Retain applicant resumes for future job openings. If you expect frequent hiring, consider purchasing an Applicant Tracking System to make organizing and retaining information on your company's hiring efforts as easy as possible.

Employee Retention:

Invest in training.
Offer bonuses or incentives for good performance.
Complete yearly performance reviews so the employee knows where she/he stands.

Important Documents:

Retain an official file on each employee that contains:
The job description.
The employee's resume.
Results of checks.
The signed acceptance letter.
The signed I-9 & copies of accompanying documents.
The signed W-4.
Results of completed performance reviews.

Also, make sure you create and distribute an Employee Handbook to all new hires. This is an important document that educates your employees on your company's policies and procedures, and should describe your obligations as an employer, and your employees' rights. In fact, this is the first document your attorney will refer to should your business ever be involved in an employment dispute, so be sure to include the Employee Handbook as a key part of your hiring process.

---

Get an easy to edit MS Word template and create your own Employee Handbook today.