How to Hire Employees

Linda Jenkins, April 05 2014

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:

Once you do decide to hire an employee, you will first need an Employer Identification Number, assuming that you do business in the United States.  You can reserve your EIN from the IRS by calling toll-free 1-800-829-4933. You must also obtain workers' compensation insurance coverage.

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 Careerbuilder, Indeed, 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.
  • Have these candidates complete a job application form.
  • Select the top candidate for background checks and/or drug testing.
  • Complete required checks.
  • Extend a verbal & written offer to the top candidate.

Once the top candidate accepts, notify the other candidates that the position has been filled. Retain candidate 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.

Important Documents:

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 easier by using a payroll services provider.

Retain an official file on each employee that contains:

The job description.

The employee's resume.

The completed job application form.

Results of checks.

Terms of the official offer.

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.


Employee Retention:
Invest in training. Offer bonuses or incentives for good performance. Complete yearly performance reviews so the employee knows where she/he stands. Learn what types of incentives small businesses can offer to attract talent. 


Also read: Employment Laws All Entrepreneurs Should Know