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Hiring Your First Employee: A Small Business Owner’s Guide to Not Messing This Up

Published by Small Town Startup on

So, you’ve hit that point. You’re drowning in work, customers keep coming, and your coffee intake is dangerously high. Congratulations—you’re growing! But also… you need help.

Hiring your first employee is a huge milestone, but if you’ve never done it before, it can feel overwhelming. Who do you hire? How do you legally hire? What if they ghost you after two weeks? Don’t worry, we’ve got you covered.

 

Step 1: Get Clear on What You Actually Need

Hiring isn’t about finding a magical unicorn who can do everything. It’s about solving a specific problem in your business. Ask yourself:

  • What’s taking up too much of my time that someone else could handle?
  • What tasks am I either not good at or don’t enjoy?
  • What kind of skills does this person absolutely, positively need to have on Day 1?

If you don’t know exactly what the role should look like, you’re not ready to hire. Figure that out first. Then, come back to this blog post and let’s continue.

 

Step 2: Make Sure You Can Afford It

Hiring an employee is more than just their paycheck. You’ve also got to consider:

  • Payroll taxes (roughly 10-15% on top of their salary)
  • Workers’ comp insurance (if required in your state)
  • Any benefits or perks you plan to offer
  • The time and money it’ll take to train them (yes, your time DOES indeed count as an expense!)

If the numbers make you sweat, consider starting with a part-time employee or a contractor instead of a full-time hire. There’s absolutely no shame in starting small and growing from there.

 

Step 3: Handle the Boring-but-Important Legal Stuff

Before you bring someone on, make sure you’ve checked these boxes:

  • Get an EIN (Employer Identification Number) from the IRS
  • Register for state payroll taxes
  • Set up workers’ comp insurance if required in your state
  • Decide how you’ll handle payroll (QuickBooks? Gusto? Using a tool like Gusto could help you with filing taxes, ensuring payroll is correct and so much more. Check it out here.)
  • Write up a clear job description and employment agreement

Step 4: Find Your Person

You don’t have to post on Indeed.com and hope for the best. In fact, we often tell small business owners to check within their network to find someone. Why? Because these folks have likely been vetted by people you already know and trust, and they are likely to perform better because they know folks in your circle, too.

  • Ask your network for referrals (friends, customers, other business owners)
  • Post in local Facebook groups
  • Attend industry meetups or small business events
  • Use LinkedIn or even Instagram if that’s where your audience is

Step 5: Interview Like a Pro (Even If You’re Not One)

Interviews don’t have to feel like a corporate interrogation. Instead of asking where they see themselves in five years, focus on:

  • Real-world scenarios: "If a customer emailed upset about XYZ, how would you handle it?"
  • Culture fit: "Tell me about a time you had to be resourceful."
  • Practical skills: Depending on the role, give them a small, paid test project. Never make someone work for free.

Step 6: Make the Offer (And Make It Official)

When you find the right person, don’t just shake hands and hope for the best. Put it in writing. Your job offer should include:

  • Pay rate and schedule (hourly/salary, weekly/biweekly pay, etc.)
  • Start date
  • Job expectations
  • Any benefits, perks, or probation periods

Step 7: Get Them Set Up for Success

The first 90 days can make or break a new hire’s success. Don’t just throw them into the deep end—have a plan for their training. What will they do the first day? How about the first week? What are the key things you need to train them on, and do you have a plan as to how to walk them through it? Make sure you do and they’ll be off to the races in no time.

  • Set up email, payroll, and access to any systems they’ll use
  • Give them clear goals for the first month
  • Schedule regular check-ins to see how they’re adjusting
  • Make sure they know who to go to with questions

The Ultimate First-Hire Checklist

Here’s a quick rundown of everything you need to do before, during, and after hiring:

Before You Hire:

  • Identify the exact tasks and responsibilities you need help with
  • Decide if this will be a full-time, part-time, or contractor role
  • Budget for salary, payroll taxes, and any benefits
  • Get your EIN and register for payroll taxes
  • Set up workers’ comp insurance (if required)

Finding & Hiring:

  • Write a clear job description
  • Post in strategic places (local groups, job boards, your network)
  • Conduct interviews focused on real-world scenarios and culture fit
  • Check references
  • Send a formal job offer

After They’re Hired:

  • Set up payroll and tax paperwork (W-4, I-9, direct deposit)
  • Give them access to necessary tools and systems
  • Outline their first 30-90 days with clear goals
  • Schedule check-ins to make sure they’re settling in

Hiring your first employee is a big leap, but it’s also one of the most rewarding steps in growing your business. With the right preparation, you’ll bring on someone who helps take your business to the next level without adding more stress to your plate. 

Now, go hire like a boss. You got this!