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4 Tips for Hiring Your First Employee in 2013

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4 Tips for Hiring Your First Employee in 2013

By Caron_Beesley, Contributor
Published: December 31, 2012 Updated: January 2, 2013

Are you turning down work because you simply don’t have enough time or hands on-board to take it on? Thinking of hiring your first employee? Congratulations – your business is doing well!

But before you advertise for a new employee, proceed with caution. Hiring staff is a commitment to the future, and should be made in the context of your long-term growth plan and whether you really want to be an employer. Here are some points to consider, plus some tips for determining whether you can afford to hire your first employee.

1. What is your vision for your business?

When faced with too much work, solopreneurs are often encouraged to hire up, but is that what you want for your business? Is it your goal to become a larger business or remain a sole proprietor? Could you farm off work to independent contractors or outsource certain functions to take some weight off your shoulders? Could you team with other businesses to complement your services? For example, a graphic designer or web designer could “partner” with a marketing consultant to offer customers a range of full-service solutions.

Virtual assistants are another non-hire staffing option and can help you with administrative and even basic sales and marketing tasks. Temporary workers might be a short term option, but be aware: many laws and regulations that apply to full-time employees also apply to seasonal or part-time employees.

The following articles offer some tips for alternative sources of labor:

2. Where do you need help?

If you’ve decided to bring an employee on board, your first step is to project your business workload and identify areas where you need help. What does your workload or pipeline look like for the next 30 days, 90 days and six months, and which jobs do you need help with? What are you doing now that you could offload or have an employee augment? Perhaps you need skilled labor out in the field, or a sales rep to help you grow your business. Or, maybe you simply want to free up your time to concentrate on bringing in and fulfilling business orders.

3. Can you manage people?

Don’t overlook this important consideration. If you’ve managed employees in another occupation, how successful were you at making good hiring decisions? How many bad ones have you made? 

4. Can You Afford It?

Working out whether you can afford to hire is a common stumbling block. Start by building a realistic picture of the costs and overheads that your business will incur. These include:

  • Wages
  • Unemployment Tax – State unemployment taxes vary by state, so check with yours. Federal unemployment tax is 0.8 percent on each employee's first $7,000 of earnings.
  • Workers Compensation Insurance – For new employers, this figure depends on your industry and the job performed. Again, check with your state about your expected rate.
  • Medicare and Social Security Taxes – Currently, Social Security tax is 6.2 percent on wages up to $113,700, and Medicare tax is another 1.45 percent.
  • Recruitment and Training Costs – These can run into the thousands, but, you can reduce them by using networking and referrals to uncover candidates.
  • Benefits – Optional!
  • Payroll Costs – It takes time and money to administer payroll and calculate taxes and withholding. Examine the cost of payroll software that can help streamline this task.
  • New Equipment – Computer, desk, other tools.
  • Software Licenses and Phone Data Plans
  • Insurance for Company Vehicles

Next, look at last year’s income and expenses and factor in the projected annual cost of an employee and the extra income one might make possible. Then, consider your pipeline and cash flow. Can you afford to live with reduced profitability for a few months as your business ramps up? Calculate what you can put into generating new business if you are freed up.

You don’t have to do this all on your own. Organizations like SCORE, Small Business Development Centers and Women’s Business Centers have resources and experts on hand to help small business owners navigate this process. Find assistance in your community here.

Additional Resources

 

About the Author:

Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

Comments:

Next Time i will consider your points while hiring... Nice post
employee is already adequate prepared within the interview. As in, that may be almost enough to employ,. That's he/she did the homework about the business, which somebody.
This is a great article, and it covers all of the things you should think about when considering whether or not to hire employees. There are easy payroll services that you can utilize for next to nothing these days, and some accounting software programs have the payroll piece built in. Keep all of the things in mind when making your decision, but also look for technology that can help make your life easier. That all of my thinking
I think your article theoretical and relatively abstract terms of content. I simply thought the hiring of any business that needs to be based on the following criteria: - Specific job it is? - A degree is important but I think that is not the most important thing, I think the most important thing is the experience and qualities of personnel that is appropriate for work are employed or not? - Company size and ability to advance in how work will be the deciding factor in the selection of the best for his work The above is a personal opinion of mine, expect people to comment
If you have any questions about starting a business, or life, auto, or property insurance, feel free to contact me. I'm a licensed insurance agent in the state of Florida, and my organization is Teacher’s Insurance Specialists.
If a potential employee is already enough prepared in the interview. As in, he/she did the homework about the company, that is almost enough to hire someone. You do not want to invest more time, but it needs to be taken care of.
This is a great article, and it covers all of the things you should think about when considering whether or not to hire employees. There are easy payroll services that you can utilize for next to nothing these days, and some accounting software programs have the payroll piece built in. Keep all of the things in mind when making your decision, but also look for technology that can help make your life easier.
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Thanks for breaking this down, especially the "Can you Afford it?" section. It seems nowadays that the cost of living is going up, taxes are rising, prices for goods and services rising - but salaries are not rising fast enough for people to continue living in their lifestyle. It would be great if the government would relax on all of the red tape and legalities, to actually create business growth.
I own a small, family-run insurance business, and making the decisions that can change the course of your organization can be very difficult. It's a scary process, but you have to decide on your vision for your organization, and once you have that in place, the decisions become a lot easier. I would also suggest finding mentors that have already been through these business changes. They can offer a wealth of knowledge that will keep you from making some of the mistakes that new business owners make. If you have any questions about starting a business, or life, auto, or property insurance, feel free to contact me. I'm a licensed insurance agent in the state of Florida, and my organization is Teacher’s Insurance Specialists. You can reach me by phone at 407.622.6634, email at simone.baldwin@horacemann.com, or visit my website at http://www.teachersinsurancespecialists.com/index.cfm.

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