5 steps to hiring your first employee

Now that you have successfully mastered being your own boss, you are ready to hire your first employee. Four hands are better than two and two heads are better than one, right? Hold on small business owner! Hiring the first employee is a milestone-one you need to take seriously. Don't make a rush to judgment that could cost you or your company big bucks.

From the first employee to the tenth, use consistent protocols. I use a step-by-step method to staff my renovation company, and except for a few missteps, I've enjoyed success. I begin with a detailed job description then I follow up with these five basic steps.

1. Set up testing. Don't let your ego trick you into trusting your ability to spot a mismatch or worse, a criminal. You might be a good judge of character but you can't get it right 100% of the time. At an interview or in a hiring situation, people will be on their best behavior. Insist on background checks, credit checks, and drug testing. If you plan to hire additional staff later, you also need to administer personality and aptitude tests. Small business employees should work well together.

2. Check references. Whether you ask for three or five, you need to follow up on all references. Of course, companies close and people move but do verify employment. Don't skip this step! I've learned so much about job candidates just by chatting with references. Keep the talk professional, though. Don't get too personal.

3. Prepare the employment package. So what's the bottom line for your first employee? During my first employee hire, I was tempted to pay the employee above the average rate. I wanted to build a strong team that rewarded my one employee. However, giving too much at the outset can limit your ability to reward hard work later, as I found out. Another factor to consider in the step is setting up performance review scheduling. Will you give reviews annually or bi-annually?

4. Create records. Most employers gather statistical information during the interview process but once you choose an employee you need good records. Verify the SSN, immigration status and address information. All this information is needed to prepare tax records for W-2s, W-4s or 1099s.

5. Announce your decision. Once you've gone from gut check to credit check to final check, you'll be ready to make a decision. Start by meeting the candidate you have chosen. It is best to meet in person to discuss the details. Review the plan you offer and discuss what you expect. Finalize the paperwork with signatures and address verification. I find it a good idea to keep a copy of the employee's driver license in his employee file. As a courtesy, I call the candidates I did not choose to thank them and give them an update.

Hiring your first employee should be exciting not frightening. Take it step-by-step and build the best team possible.

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