Hiring People

Whatever stage you’re at or type of business you run, making the decision to hire can feel monumental. The smaller the organization, the bigger the impact of each hire.

In this guide we’ll focus on how you can hire in a way that’s beneficial for you and your employees while complying with federal and state regulations.

When’s the right time to hire?

When it comes to hiring, many independents struggle with timing. They either hire before knowing what they actually need or wait until they are overwhelmed. Some never get around to it at all, feeling they have to do everything themselves.

Some signs you might be ready for help:
  • You’re turning down work or falling behind on existing work.

  • You need new skills or expertise.

  • Growing the team will lead to new revenue opportunities.

  • You can pinpoint specific tasks and responsibilities for the new hire.

  • You know what results you want to see in your business.

  • Finally, you’ve evaluated the costs against your budget or expected cash flow.

Ways to Hire

You’ve got a lot of options when it comes to hiring. The first decision is whether to hire a full-time vs. a part-time employee.

Full-time employees work at least 30 hours per week or 130 hours per month.

Full-time employees can be salaried or paid hourly, but hourly workers who put in more than 40 hours per week must be paid overtime and receive legally required employee benefits.

Part-time employees work less than 30 hours per week, often with a flexible schedule but with no access to benefits.

Part-time workers can be salaried like full-time employees or they can be hired on an hourly or per-contract basis. Keep in mind that salaried part-time employees are similar to full-time employees come tax-time—both receive a W2 summarizing wages and taxes withheld from their paychecks.

Some other types of part-time workers include:

Independent contractors (or freelancers) are people working under the terms of an agreement, typically for hourly pay over an extended period of time (months or years). Because they are companies or self-employed individuals themselves, they’re responsible for their own benefits, taxes, and management.

Contractors can be a cost-effective option, but be aware of how they differ from employees to avoid hefty penalties at tax time. The IRS requires employers to send out a Form 1099-MISC to independent contractors who earned over $600 that year. If you’re unsure about the right employment status for your hire, Intuit has created a handy tool for evaluating specific cases.

Professional service providers are self-employed individuals or small firms that provide services like accounting, legal, human resources and administration. You can find a firm locally, or use online services to find a match. Fee arrangements can include fixed prices, billable hours, outcome-based fees (especially for lawyers) or retainers/ advance payments for a period of time.

Seasonal / temporary employees work only for a specified period of time. They can be either full-time or part-time for that specified period depending on how many hours a week they work and the duration of their employment.

Why are you hiring?

It’s easy to think in generalities like “I need a marketing person”. The problem with this is that this doesn’t tell you enough about what the person will actually do. And if you don’t know that, how can you know who to hire?

  • Do you have a clear sense of the day-today responsibilities of the role?
  • How will the person work with you or your existing team?
  • How will you evaluate the person’s impact on your business?

How much do people cost?

The cost of hiring people will vary greatly depending on the skills and experience needed and where you live. Don’t forget to account for all costs, including:


The hourly or salary wage paid to workers over a period of time. You can use salary calculators to determine standard rates by location, industry and experience, and the Action Plan also includes payroll averages for your industry and location. Full-time work is 2,000 hours per year in the United States, so it’s easy to quickly convert hourly wages to annual salaries and back (e.g. $30/ hour is approximately $60,000/year).


Any fees you spend on recruiters, agencies, job fairs, online job boards and travel. If you’re finding and screening applicants yourself, don’t forget to factor in the cost of your time.

Employee taxes & benefits

Depending on your state, employee benefits may include: healthcare, paid time off, social security taxes, unemployment insurance, worker’s compensation and disability insurance, paid medical leave and retirement plans. For full-time workers, expect to pay 1.25 to 1.5 times the base salary to cover these expenses.

How to hire

Finding the right people means following a few key steps: defining the job, attracting potential candidates and screening/interviewing.

Defining the job

First write down the tasks that this person would do. Be as specific as possible. How will you evaluate their work for each job? What outcomes do you want?

Now write down the skills that someone would need to succeed in this role. Again be specific. “Good with computers” is not a thing.

Finally, think about the culture of your team. What kind of personal skills will someone bring to the group?

Once you’ve determined the help you are looking for, ask yourself how big a job this is: full-time or part-time? One position or several? Temporary job or ongoing?

Writing it Up

Once you’ve written out your expectations for the job, it’s time to write a job description. Don’t get bogged down in the details. Make it accurate and attractive to the right candidates.

Not sure where to start? We provide a job description template on the next page.

Job Description Template

  • Title

    This should accurately reflect the nature of the job, duties, and ranking within the company, and it should be self explanatory and easy to compare to similar jobs in the industry. Specify if a full-time employee or a contractor/freelancer.

  • Responsibilities

    These should clearly reflect the description that you write above, but written as outcome-based sentences: “Does X to help company do Y.” If you can, specify what percentage of time each responsibility requires. Will the job require travel, and if so, how much?

  • Skills & Competencies

    Skills are things a candidate can do (like analyze data or build a website) based on their training and qualifications. Competencies are traits you expect them to display (like good communication or the ability to work in a team).

  • Team

    Who will they be working with and in what capacity? Who will they report to? Will they work independently or as part of a team?

  • Salary & Benefits

    Include a range here so you have some flexibility depending on the experience of your candidates. In addition to any health and retirement benefits, consider other benefits like flex time/working from home, company events and corporate memberships at gyms or other local businesses.

  • Company

    Finally, include some brief information about your company— what do you do and why? What to do you hope to achieve?

Getting the Word Out

You’ll need to use your best judgment to figure what’s right for you. Here are some ideas to get you started:

  • Word-of-Mouth

    Most jobs are local, and chances are your strongest network is as well. Put the word out there about what you’re looking for and chances are that people will have some ideas.

  • Social Media

    Get the word out to more people using tools like LinkedIn, Facebook and Twitter.

  • Job Boards

    There is a vast world of online job boards where employers can post to find candidates. The big cost here is time, requiring you to sift through a large pool of applicants to find the needle in the haystack.

  • Schools

    Local colleges and universities as well as local professional training schools have job boards for student and alumni.

  • Freelancer Sites

    If you’re interested in hiring a freelancer for a project, there are a variety of online sites where you can go to find talent by expertise and industry. As with any job, you’re likely to get the best results with a specific, clearly written job description.

  • Staffing Agencies

    They can help you find part-time and contract folks quickly and efficiently. Search for local or industry-specific options with strong reputations in your network.

  • Recruiters

    Professional agencies and headhunters are usually filling executive or high-level positions at big companies, but recruiters freelance just like everyone else.

Interviewing Candidates

Once you’ve determined which candidates to interview, here’s how to prepare for the interview and ask real questions that will elicit valuable responses:

  • Consider a telephone call before scheduling an interview. In some cases, spending 15 minutes reviewing responsibilities and expectations is time well spent before committing to an interview.

  • Before each interview, re-read the candidate’s cover letter and resume and be prepared to answer questions they might have about the role, the company, benefits, etc.

  • Try and ask all candidates the same interview questions or you might come away realizing that you didn’t learn what you wanted.

  • Get candidates to tell stories about how they’ve worked in the past rather than talking about hypotheticals. Look for their passions.

  • Try and not get hung-up on details or personal peeves that don’t matter to the job.

  • Don’t ask inappropriate or illegal questions, including questions about family planning, disabilities, age, country of origin, race/ ethnicity, gender or religion

Evaluating Candidates

Evaluating people can be challenging. We’re often required to do it without a ton of information, and there’s always an aspect of taking a leap of faith. Here are some things to consider:

  • How well do their skills and competencies match your needs?

  • Are they qualified for the job in terms of experience level or certifications?

  • Do they have a clear job history with a description of the impact of their work?

  • Have they had significant gaps or career changes?

  • Do they communicate clearly and effectively?

  • How well does the job and your company match theirand interests?

  • Does their career path make this role an appropriate next move?

  • What do their references say about them?

  • How was your rapport with each other during the job interview?

  • Do they have the potential to grow into an asset for your company?

If you’re on the fence, consider doing a two-way test drive with a part-time position for a few weeks or even months before taking the leap to a full-time position. This is sometimes presented as a “contract-to-hire,” with the understanding that only a successful contract period is likely to lead to a full-time position. This will give you both an opportunity to experience working together while also providing you with an extra set of hands for pressing projects.

What do you do when it’s time to hire?

When you’re ready to hire an employee (especially a first employee), there are a series of things you’ll need to do first to make sure your business is compliant with federal and state regulations. Here’s a list, courtesy of the Small Business Administration:

Verify the Employee’s Eligibility

Within three days of hire, employers are required by federal law to complete Form I-9, which requires employers to examine documents confirming the employee’s citizenship or eligibility to work in the U.S. Employers can only request documentation specified on the I-9 form, and they’re required to keep it on file for three years after the date of hire. Employers can use the Form I-9 to electronically verify the employment eligibility of newly hired employees by registering with E-Verify.

Get an Employer Identification Number (EIN)

Before hiring your first employee, you need to get an Employer Identification Number (EIN) by submitting an IRS Form SS-4. Also known as a Federal Tax ID Number, an EIN is required for tax purposes and reporting information about your employees to state agencies. You can apply for an EIN online.

Set up Records for Withholding Taxes

You’re required to keep records of employment taxes for at least four years. Keeping good records can also help you monitor the progress of your business, prepare financial statements, keep track of deductible expenses and prepare your tax returns.

The three types of withholding taxes you need for your business are:

Register with your State’s New Hire Reporting Program

All employers are required to report newly hired and rehired employees to a state directory within 20 days of their hire date.

Obtain Workers’ Compensation Insurance

All businesses with employees of virtually any type are required to carry some form of workers’ compensation insurance coverage through a commercial carrier on a self-insured basis, or through their state’s Workers’ Compensation Insurance program. Workers’ compensation insurance provides wage replacement and medical benefits to employees injured in the course of their work and protects your business from lawsuits.

Post required notices

Employers are required to display certain posters in the workplace that inform employees of their rights and employer responsibilities under labor laws. Visit the workplace posters page for specific federal and state posters, and be sure to check out the Bureau of Labor’s handy poster advisor.

File your taxes

Generally, employers who pay wages subject to income tax withholding, Social Security and Medicare taxes must file IRS Form 941, Employer’s Quarterly Federal Tax Return. New and existing employers should consult the IRS Employer’s Tax Guide to understand all their federal tax filing obligations.

In addition to requirements for keeping payroll records of your employees for tax purposes, certain federal employment laws also require you to keep records about your employees. The following sites provide more information about federal reporting requirements:

Comply with Standards for Employee Rights

Complying with standards for employee rights in regard to equal opportunity, fair labor standards, minimum wage, overtime and child labor is a requirement. Here are resources for up-to-date information on statutes and regulations:

Protect Your Business and Intellectual Property

When hiring new employees, whether full-time or freelance, consider having them sign legal documents that protect your company’s interest and intellectual property (IP).

  • Employment Agreement/Contract

    This is designed to protect both employer and employee interests and usually includes things like duties, wages, confidentiality and benefits.

  • Non-Disclosure Agreements (NDA)

    This is a document specifying what information you want an employee to keep confidential. You can include this in their contract or give them a separate one.

  • Non-Compete Agreements

    This limits employees from going to work for one of your direct competitors for a set period of time after leaving your company (typically 1-2 years). It can be a separate agreement or a clause in a contract. Keep in mind that not all hires will be willing to sign one since they can sometimes be overly prohibitive depending on the nature of the work.

    Provide a Benefits Plan

    If you’re hiring a full-time employee, you’ll need to have a benefits plan in place that meets federal and state requirements, as well as your own preferences.

    Required benefits for full-time employees:

  • Social Security taxes

    Every employer must pay Social Security taxes at the same rate paid by their employees.

  • Unemployment insurance

    In most states, unemployment benefits are funded by a tax imposed on employers.

  • Workers’ compensation

    Businesses with employees are required to carry Workers’ Compensation Insurance coverage.

  • Disability Insurance

    This benefit is required in California, Hawaii, New Jersey, New York, Puerto Rico and Rhode Island.

  • Family and Medical Leave

    FMLA entitles employees to have 12 weeks of unpaid, job protected leave during any 1-year period for the birth or care of a child, the care of an ill family member or to care for the employee’s own serious health condition.

Additional benefits for full-time employees:

Consider other benefits like flex time/working from home, company events, and corporate memberships at gyms or other local businesses.