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If you’re a small business owner getting ready to grow and scale your business, you’re likely experiencing a tremendous amount of confidence and trepidation — and you probably have loads of questions about onboarding your first employee.

Before you hire your 1st employee, you’ve got to make sure your business is in good legal form. Regulations increase when you become an organization of more than one, so be sure to get your paperwork in order.

Legal Business Requirements to Meet before You Hire

You’ll need an employee identification number, which you can get for free from the IRS. Go straight to the IRS website for this — do not pay another agency to do this on your behalf. It’s a very simple process.

If you haven’t done so already, form an LLC or S-Corp after determining which is best for your business, then register with the Department of Labor in your state. You may also have to register with local entities, especially if your business is located within a city. Be sure to ask about any applicable city wage tax if you do.

If you get lost, the Small Business Association and your local Chamber of Commerce are expert resources and provide many services, including mentorship, free of cost.

Decide on What You Need From an Employee

Do you need someone in-office at all times? Could a remote worker handle what you do? Will you guarantee full-time hours, or do you only need part-time help? Many small business owners begin their business scaling and growth processes by outsourcing admin tasks, marketing duties, and more to part-time employees and freelancers.

Considering the paperwork and expense involved in onboarding a full-time, in-office employee, a remote option might work better for you.

Your First Employee: Tax and HR Setup

If you’re like most small business owners, human resources tasks will fall to you. Here’s what you need to do to get ready for your first employee:

  • Get the Right Insurance: Workers’ compensation is especially important. This protects workers if they become injured on the job. Even if you work in an office setting, accidents can happen.
  • Set up Payroll: You’ll be legally required to withhold and deposit some of your employees’ earnings directly to the IRS. This includes Medicare tax, social security, and more. Additionally, you’ll have to calculate and withhold the correct amount for your state and local taxes. Consider using payroll software to help you get this right.
  • File Your Form: Each year, you’ll need to file IRS Form 940 for federal unemployment tax.

Employee Tax and Verification Forms

Your new employee will need to fill out certain forms if they are a full-time worker. Note: Many startups treat full-time remote workers as 1099 (independent contractor) employees, but the IRS has stringent guidelines on the difference. Take some time to learn them.

If your worker is a contractor, the IRS provides more information and forms. Otherwise, you’ll need your employee to fill out Form W-F (Withholding Allowance Certificate) and Form I-9 (Employment Eligibility Verification). You will need to verify that your employee is legally able to work in the United States. Find a full list of IRS forms here.

Legal Workplace Safety Measures

If you’ve worked in a retail or office location before, you’ve seen those OSHA posters. These signs inform workers about their rights concerning workplace safety. If you have any additional on-site safety considerations, always post additional instructions for safe use. Document any training or education you provide regarding equipment with safety risks. This reduces your risk.

Create HR Files and Establish Benefits

Does your business provide health insurance, disability insurance, or a 401(k) plan? If so, make sure to get that information set up on day one, and be clear to your employee about when those benefits begin. You should also establish a secure digital folder for your employees’ performance evaluations, benefits information, forms, job applications, and more.

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Learn to Delegate

If you’re used to kickin’ it alone in the office, you’re also accustomed to handling most tasks. One of the most difficult parts about bringing other employees into your physical or virtual workspace is letting go of some of those responsibilities.

Especially in a small business or startup environment, you and your other employees need to be dynamic — you need someone you can trust to hop in and handle something you normally do. At first, it can be hard to let go of one part of your business.

You’ll want to have some basic tasks ready for any employee to complete on their first day. Appear organized and focused. Have an action plan with your new employee to make them feel valued.

Decide What to Delegate

We recommend delegating tasks to your employees when the task is:

  • Not worth your time (per hour)
  • Tedious
  • General administrative work
  • Something your employee has a specialization in and can complete more efficiently than you
  • An established process that could use review and improvement (new employees have fresh ideas)
  • Less important than your major tasks such as closing big deals and speaking with prospects

It’s only fair to your employee that you’ve gone through this process of accepting delegation before you bring them onboard — otherwise, it can come off as unsure leadership or mistrust in their abilities.

Create an Onboarding Process

Establishing an onboarding process is crucial to your new employee’s success. You’re providing your new employee with a solid plan for incorporating them into your workflow and culture — and, if you’re smart, you’re laying the groundwork for their valuable input and contributions.

At a minimum, a comprehensive onboarding process should include:

  • A formal welcome letter
  • A copy of the new employee’s job description and title
  • Company policies and expectations — legal, formal, and informal
  • Employee handbook
  • Information about the dress code, including expectations for remote workers appearing only on video conference
  • Login information for computer(s) and any web-based software
  • Benefits information, including login and contact information and the start of enrollment date
  • Company email login information and instructions
  • Technical support contact information
  • The physical layout of the office, including a floor plan and location of bathrooms, coffee, and snacks
  • Contact list of your regular vendors
  • Your contact information
  • Call-out and inclement weather procedures
  • Schedule for the first day
  • Outline of new employee’s goals
  • Pay schedule, holiday schedule, and a special note about the date of the first pay
  • Bank forms required for direct deposit

A great side effect of preparing this material is that it will help you get organized.

On the first day, many employers also take their employees out to lunch or treat them to delivery. During lunch or the workday, have a conversation about company goals as well, and make sure your new employee feels able to contribute to them.

Part of the appeal of working for a startup involves seeing immediate impact — but check in with your new employee to see why they are excited to work with you. See if you can include them on projects that further that enthusiasm.

Don’t forget to set your new employee’s physical workspace up for success: In addition to their computer setup, you should provide them with office supplies. Even if you are hiring a remote employee, sending along office supplies, coffee, or tea in the mail is a kind gesture.

For in-office or remote employees, including standard operating procedures or process walkthroughs for project management software, customer relationship management tools, and more. It’s possible to organize this completely in a Google Drive folder and provide read-only access to employees.

While employee trust is important, a resentful employee can really wreck your day. Make sure you protect yourself from the start by providing read-only access to necessary documents.

Above all, enjoy the help you’ve worked so hard to afford. Best of luck scaling your business!

Written By
Magnolia Potter is a muggle from the Pacific Northwest who writes from time to time. She covers a variety of topics and prefers not to settle on just one. When Magnolia’s not writing, you can find her in the outdoors or curled up with a good book.

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