Hiring Your First Employee

Interviewing & Paperwork

Questions, ask many questions. Ask them of yourself, and ask them of your potential hires.

You need to know exactly who you want to help you grow your business. What you don't need is to hire somebody just like you, says Bruno, whose agency assists in recruiting secretarial, administrative and human resource professionals. "You want their strengths to complement your weaknesses," she says.

But that's the easy part, according to Bruno, who insists that you investigate prospects' references. "Reference-checking is an art," she says. "And it has to be, because in this day and age, sometimes a person's entire resume is a fantasy." There is one crucial question you must ask every reference, and if you phrase it in just the right way, it's difficult for that person to give a vague answer. It's simply "Is this person eligible for rehire?" "If the answer is yes," says Bruno, "you've got a good person. If it's no, then no."

There are three basic guidelines you should stick to in a job interview, says Vernon:

  • Keep it legal. Because of federal guidelines and laws that vary from state to state, you can get sued if you ask questions that have nothing to do with the job, says Vernon. Stay away from topics such as your potential employee's religion, ethnicity, sexual orientation, whether he or she is married and whether he or she wants children. "Just keep it focused on the job," says Vernon, "and you'll be fine."
  • Be honest. For obvious reasons. "Even be blatantly honest," says Vernon. "If there are difficult parts of the job, let them know upfront."
  • Ask tough questions. "Ask them to show you how they would do something," says Vernon. "If you need an administrative assistant, tell them to turn on the computer and get into Word and write you a letter." Or give them real-life examples of challenges they may face working for you and listen to how they think they'd handle the situation, suggests Vernon.

And how do you explain to your first employee that you're hiring him or her to do the tasks that you'd rather not do? "It's all how you frame it," observes Beth Ellenby, owner of Rest of Your Life Productions, a Norwalk, Connecticut, coaching firm for individuals and corporations. Ellenby's business has been running entrepreneurship coaching groups for women in New York City for the past two years. "For some people, the grunt work is doing the accounting. But for [other] people, there's nothing more fun than getting a big box of papers and sorting through them. For some people, they dread making cold calls. Others say 'Let me at it.'"

And Ellenby adds that it's impossible to get rid of all the grunt. "When you're only two people, you're both going to have to do things you don't love doing."

Dealing With Paperwork

W-2s. Payroll taxes. Social Security. 401(k)s. Health insurance benefits.Even if the latter two aren't part of your initial program, the paperwork that goes into hiring an employee can be mind-numbing. That's why the general consensus is: Have someone else do it for you. Do not go it alone.So where do you go for help? If you're going to offer a health plan, you need to find a reputable health insurance agency to work with. But if you want to get payroll off your hands as well, Bruno suggests hiring a service such as Paychex or Automatic Data Processing (ADP) Inc., two services that can also help you with a 401(k), health benefits and just about anything else you'd need. There are plenty of other good payroll companies out there-just make sure you do your homework. You should be comfortable and confident that it's a reputable business.What you will spend to have your checks printed and taxes taken out and everything else that goes along with payroll depends on what kind of deal you offer your employee. At first, Medley paid his payroll service about $40 per month-and that's exactly how often he paid Bankert: once a month. It made sense, because Netfor was being paid once per month. But it also saved money. The more often you pay your employees, the more benefits you offer and the more employees you have, the more expensive your payroll services will be. But it's well worth it, says Medley, explaining that somebody he knows well got into trouble with payroll taxes. "And upon learning how badly that can go, you realize very quickly that you want someone else doing your payroll," says Medley, who adds that if your business shuts down and you still owe payroll taxes, the government will come after you-not your defunct corporation. With a payroll service-again, a reputable one-"then your liability doesn't exist," says Medley. "The risk is all theirs."

Geoff Williams has written for numerous publications, including Entrepreneur, Consumer Reports, LIFE and Entertainment Weekly. He also is the author of Living Well with Bad Credit.

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