Hiring new employees isn’t a simple process. This is a massive step in your business journey – for many, it’s when you truly feel that you’re starting a proper business. You may have been going at it alone for months, possibly even years, but the time has come to hire some assistance. It’s a good sign; if you need employees, you need extra help, which usually means there’s too much work coming in for you to handle.
However, before you get caught up in the moment, there are some crucial things to know:
You need a tax ID number
If you’re operating a business independently, you will most likely pay tax as a self-employed individual. But, when you start hiring employees, you will need a Federal Employer Identification Number (FEIN). You can apply for a tax ID number here that will provide you with one of these, and it’s a legal requirement to hire and pay employees.
This is something that a lot of business owners don’t know about when making their first hires. So, to avoid trouble with the law, ensure you get the proper tax ID beforehand.
You need to provide a competitive salary
Yes, being a small business will mean you lack the funds that more prominent companies in your industry possess. With that being said, it’s not much of an excuse. You’ll struggle to find willing employees who will stick with you long-term if you aren’t paying a competitive salary. Even if it means you reduce your budget in other areas of your business, you need to pay people what they deserve.
Look at the average salary for the roles you’re hiring for in your area. This should be the absolute minimum that you’re willing to pay. It could be beneficial if you pay them above the average to encourage more applicants and inspire loyalty – who’d leave a business that pays them so well? A good salary can also lead to improved productivity, meaning your employees help you generate more money to compensate for this!
You need to carry out background checks
After listing your jobs and pouring through the applicants, you’ll arrive at some that catch your attention. Interviews come next, and you slowly end up with a couple of people you’d like to hire. Before you jump the gun and hand them a contract, run a background check.
On a basic level, this means contacting any previous work references to check if they are legitimate. This gives you a good understanding of how the applicant works with others. Sometimes, a smart idea is to contact the business rather than the actual reference. It ensures you get a more honest review of the applicant. Then, think about running criminal background checks just to see if they left anything out of their application and are trying to hide something. It sounds extreme, but background checks can help you avoid a catastrophic hire that ruins your business.
You will have plenty of other considerations – like writing good job descriptions – but these three things often get forgotten. Hopefully, this helps you make better hiring decisions without damaging your business.