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Who is the First Employee You Should Hire for Your Startup?

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Jesse Gee
Jesse Gee is an entrepreneur who has successfully built over a dozen businesses in the construction, finance, & insurance industries.

As an entrepreneur, you’re used to wearing at least a dozen different hats as you pull 18-hour days to get your startup off the ground. But now that you’re gaining momentum and clients the workload isn’t nearly as manageable as it once was. Who are we kidding? It was never really manageable, but you’ve made it this far relatively unscathed.

So, now what? You’ve thought about hiring someone to take a portion of the workload off your plate, but who should be your first hire?

Before you start accepting applications, there are a few things you need to figure out. Consider the following:

1. What role would an employee fill to give you the most bang for your employer buck? Do you need an administrative assistant or a personal assistant? A social media guru or a marketing genius? You must decide where you need the most help when you can’t do it all on your own anymore. The first employee you hire should be the one that gives you the most help where you need it, now. Regardless of the position title or type of work, there is no standard “first hire” position. It simply boils down to where you need the help most.

2. Do you have enough work to justify hiring an employee? Although it might seem like you’re drowning in administrative tasks right now, what about once you’re all caught up? Would hiring a freelancer on an as-needed basis get you caught up and keep you there without breaking your operating budget?

3. Can you even afford to hire help yet? Sure, business is booming – right now. But what about three months from now? What are your projections versus overhead?

How much can you afford to pay an employee?
Do you need someone full time or would part time suffice?
Will you offer benefits in addition to a salary? If so, which ones? Health coverage, 401(k), etc.?
Would a college intern fit the position, or do you need a seasoned veteran? This is important because the salary will need to be commensurate with the position and experience level to attract the best candidates.

4. Are you prepared for the legal requirements of hiring an employee? Officially hiring an employee carries with it several legal obligations to make sure your business is compliant with both State and Federal regulations. According to the US Small Business Administration (SBA), the following seven steps will get you well on your way to correctly hiring not just your first employee, but all those who follow as you scale your business:

Obtain an Employee Identification Number (EIN): The EIN is required for tax reporting purposes and conveying information to state regulators.
Set up Records for Withholding Taxes: Per the IRS, you will need to maintain employment tax records for four years for all employees. These records must include Federal Income Tax Withholding (W-4), Federal Wage and Tax Statement (W-2), State Income Tax Withholdings (where applicable).

Employee Eligibility Verification: Employers must verify an employee’s eligibility to work in the US. This requires the completion of Form I-9 and then maintaining that form on file for three years from the date of hire.

Registration with the Appropriate State New Hire Reporting Program: This registration must take place within 20 days of an employee’s hiring.
Procurement of Workers’ Compensation Insurance: Self-explanatory.

Posting of All Required Notices: These are the notices that inform employees of their rights under state and federal labor laws.

Filing Your Business Taxes: According to the IRS, “Generally, employers who pay wages subject to income tax withholding, Social Security, and Medicare taxes must file IRS Form 941.”

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