How To Hire An Employee
SO YOU'VE FINALLY GOT YOUR small business up and running. You're landing clients. You've made the big move from the garage to an office space. You've got customers clamoring for more. Success may be felt in various ways, but one symptom is almost always prevalent: The work load is overwhelming. Suddenly, you're spending hours doing tasks that could easily be handed off to someone else that is, if you had someone else. In other words, you're ready to start hiring employees. Fact is, once a business takes off, owners who continue to sweat the small stuff rather than devoting themselves to the "core elements" of their companies will lose sight of the big picture and ultimately drive their businesses into the ground, warns Shawn Smith, president of Harrison, N.Y.-based Next Level Consulting and co-author of "The HR Answer Book." Hiring an employee not only will reduce your workload it may also breathe new life into your business. But there's a lot of preparation work involved before someone can start calling you "boss." Here are a few tips: 1. Know Exactly What You Need Start by making a list of the specific tasks a potential employee would do and how long each is likely to take. If it doesn't add up to more than 20 hours of work per week, you might consider hiring a part-time employee, a freelancer, or an intern. If, for example, you only need 10 hours of marketing help each week, hiring a freelancer or an intern on an hourly basis saves you some of headaches involved with hiring a full-time employee, which includes paying Social Security taxes and calculating paycheck deductions. (More on that below.) But regardless of whether you're looking for full- or part-time help, always be honest about the job description, says Smith. If the job is 90% secretarial and 10% creative, say so upfront. It will save you and the new employee a lot of trouble in the end. 2. Look Locally
Unless you're a fast-growing, high-profile small company, you probably won't have much luck attracting your first employees through big national job boards like Monster.com, says Smith. After all, most job seekers are only willing to move for a position they know provides lots of security. Instead, try networking with other business owners in your area. Where did they go for, say, good but cheap Web design, advertising, or secretarial help? You might also try posting your job opening on smaller, niche Web sites that will appeal to people trying to break into your industry. Another option is to partner up with local colleges and universities, which often stage job fairs in the spring. Is there a local business school in your area? Post a job description on the school's electronic or physical bulletin boards. You may find a business student with specialized skills who's willing to work for a low wage or class credit. If you can't offer a high salary and most small companies can't try to emphasize the job's other benefits. In a small company, employees usually have more responsibility than in large ones. Be sure to highlight your company's best attributes a fast-paced or casual environment, generous vacation policies, a family culture as well as the chances a new employee might have at mentorship and hands-on learning experiences.
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Once you find a candidate you're interested in, check him or her out thoroughly. "It's amazing how people can falsify their credentials and present themselves as something they're not," says attorney Anne Covey, of Covey & Associates in Lambertville, N.J. At the very least, be sure to confirm the time periods an individual worked with former employers, and check the degrees earned with the appropriate universities. If you don't have time for a long conversation with former employers, at least ask them if they'd rehire the person or not, she says. To be very safe, and especially if your potential employee will be handling money, you also should do a credit check and a criminal background check. (Just be aware that you need to let the job candidate know in advance that you are doing so.) A common mistake entrepreneurs make is to hire people because they know them or because their friends know them, says Rebecca Mazin, co-author of the "HR Answer Book" and principal of Larchmont, N.Y.-based human resources consulting firm Recruit Right. "My favorite reference is, 'He's a nice guy,'" she says. Sure, niceness usually counts for something. But chances are you're looking for additional qualities beyond that such as a good work ethic, solid skills and, say, leadership abilities. 4. Put It in Writing
Whether you're hiring an intern or a full-time employee, always provide an offer letter. Covey says an offer letter should include the employee's salary, job title and description, a start date and, if appropriate (as when working with interns) an end date. It's also a good idea, once the employee arrives, to put your expectations for him or her in writing. You also should consider creating an employee handbook especially if you're likely to continuing hiring more employees going forward. An employee handbook is the best way for an employer to protect itself in court, says Covey, since it clearly outlines the do's and don'ts of your burgeoning office culture. It should include the company's policies about things like office hours, appropriate office dress, telephone etiquette, harassment, racial discrimination, sick leave, maternity leave, benefits, deductions and vacation. You can get a generic version of an employee handbook from your state's labor relations board, an HR outsourcing or staffing company, or perhaps your local chamber of commerce. Just remember to add policies or rules that may be unique to your business or industry. If you run a delivery business, for example, be sure to include specific rules for driver conduct. If you're asking employees to work unusually late or early hours, or to perform tasks that are potentially dangerous, spell out special procedures for transportation or safety. 5. Consult With an Employment Law Attorney
Hiring an employee means more than just buying an additional desk. You need to be sure to comply with federal and state labor laws. For example, is your employee eligible for overtime pay? Most workers, including all manual laborers and blue-collar workers, must be paid time-and-a-half if they work more than 40 hours a week. Office workers who make less than $23,660 are also entitled to overtime pay. Other office workers, like executives, administrators, and other white-collar professionals, are often not entitled to overtime pay, provided they perform certain job duties and are paid salaries that meet federal minimums. If you're unsure as to whether you should be paying overtime or not, seek advice from an attorney, says Jonathan Wilson, head of the labor and employment law practice group at Dallas-based law firm Haynes & Boone. For additional information on this, check out this IRS publication. You can also learn more at the Department of Labor's Web site. 6. Get Savvy About Payroll Procedures
Payroll operations are often a lot more complicated than a novice business owner expects. So even if you're only hiring one or two employees, it's worthwhile to schedule at least a one-time consultation with an accountant to set up a proper payroll system. Remember, as an employer, you're now responsible for paying half your employees' Social Security and Medicare taxes, also known as FICA taxes, under the Federal Insurance Contributions Act. You're also on the line for federal and state unemployment taxes, as well as workers' compensation fees, which vary depending on the kind of work your employees do. (In high-risk occupations like roofing, for example, employers are required to pay steeper fees). You may also need to assist your employee with calculating the number of deductions claimed on their W-4 form, which will affect the amount of federal income tax withheld . Standard payroll deductions usually include federal income tax, Social Security and Medicare taxes, state and local taxes, and state disability income tax. But payroll deductions can get more complicated than that. For example, some employees need alimony and child support payments deducted from paychecks. This can get tricky, particularly if these deductions could cause the worker's salary to fall below minimum wage. If you have several salaried employees or workers with complicated deductions, it may be easier to hire an outside company to calculate and administer your payroll. Finally, keep in mind that if you've set up a retirement plan or other benefits for yourself through your company, you must offer these programs to your employees, says Chris Carney, a business development manager in the White Plains, N.Y., office of HR outsourcing firm Gevity. In larger organizations, owners and upper management may participate in profit-sharing and pension plans that aren't available to everyone. But in smaller shops, owners must distribute benefits equally among their staffers. For more on this, click here.
