How to Hire Your First Employee

Your first hire is one of the most consequential decisions you'll make. Done well, it doubles what your business can do. Done poorly, it costs you months of distraction and tens of thousands of dollars. This guide is the checklist we wish every first-time employer had.

1. When to hire

Hire when one of these is true: you're consistently turning away work; the work you're doing yourself is below the value of your time and is preventing the higher-value work; or a specific skill you don't have is now blocking growth.

Do not hire because you're tired or because everyone says you should. The wrong hire is more expensive than no hire.

The rough math: A full-time employee costs you approximately 1.25–1.4x their base salary once you add payroll taxes, workers' comp, unemployment insurance, and any benefits. Plan for that number, not the salary number.

2. Define the role before posting it

Write a one-page role document before writing a job ad. It should answer:

• What is this person responsible for? Three to five sentences.
• What does success look like in 90 days? Specific, measurable.
• What does success look like in 12 months?
• Who do they work with daily?
• What are the must-have skills vs. nice-to-have? Be honest. "Must-have" should be three items max.

If you can't write this clearly, you don't know what you're hiring for yet, and you're not ready to post the job.

3. W-2 employee vs 1099 contractor (the question everyone gets wrong)

This is not a choice you make. The IRS and your state determine it based on the actual working relationship, not what you write on a form.

Indicators of a W-2 employee

• You control how, when, and where the work is done.
• You provide tools, training, and equipment.
• The work is ongoing and central to your business.
• The worker has no other clients.
• You set their hours.

Indicators of a 1099 contractor

• They control how the work gets done.
• They use their own tools.
• They work for multiple clients.
• The work is project-based with a defined start and end.
• They set their own hours.

The risk: If you classify someone as 1099 to avoid payroll taxes and the IRS later reclassifies them as W-2, you owe back taxes, penalties, and interest. States have been aggressive on this. When in doubt, classify as W-2.

4. Where to find people

• Your network first. Tell every contact you're hiring, with the role document. Referrals out-perform job board hires almost every time.
• Indeed, ZipRecruiter, LinkedIn. The big three. Free to post on Indeed; LinkedIn jobs is paid but high quality for professional roles.
• Community colleges and trade schools. Career services offices love hearing from local employers. Often free.
• Local Facebook groups for the industry or neighborhood.
• Your customers. Sometimes the best hires already know and love what you do.

5. How to interview without bias

Three principles. Ask every candidate the same questions in the same order. Take notes during, not after. Have a second person interview when possible, separately, and compare notes only after.

The 5 questions that beat 30

1. Tell me about a time you did something similar to what this role requires. Walk me through it.
2. What's something you've worked on that didn't go well, and what did you learn?
3. Why this role, why now, and why us?
4. What are you hoping to be doing in three years?
5. What questions do you have for me?

Their questions reveal more than their answers. Candidates who ask thoughtful questions about the business have done their homework. Candidates with no questions usually don't really want the job.

Trial work, paid

For non-management roles, a paid 2–4 hour trial assignment tells you more than five interviews. Pay them for it; never ask for free work.

6. Make the offer

A written offer letter (not a contract). Cover: title, start date, compensation, schedule, benefits if any, "at-will employment" language (in most states), and a deadline to respond (typically one week).

Verbal offers cause problems. Always put it in writing, even if you've already told them on the phone.

7. Required paperwork (federal + Florida)

Before their first day of work, you must:

• Get a Federal Employer Identification Number (EIN) from irs.gov if you don't already have one. Free, takes 10 minutes online.
• Register for Florida Reemployment Tax through the Department of Revenue.
• Register for federal payroll taxes (this happens automatically through your payroll provider).
• Purchase workers' compensation insurance if you have four or more employees in Florida (one or more in construction). Required by state law.

On or before their first day, the employee must complete:

• Form I-9 (Employment Eligibility Verification), within 3 business days of the first day worked. Keep on file.
• Form W-4 (federal tax withholding).
• Direct deposit authorization if applicable.
• Employee handbook acknowledgment (recommended; not legally required for small employers but protective).

Florida new-hire reporting: Within 20 days of hire, report to the Florida Department of Revenue's New Hire Reporting Center. Required.

8. Set up payroll

Do not run payroll manually. The penalties for misfiling are too easy to incur. Use a payroll service. The major options:

• Gusto, popular with small businesses, $40/month plus $6/employee. Handles tax filing, W-2s, direct deposit.
• QuickBooks Payroll, integrates with QuickBooks accounting. Similar price.
• OnPay, competitive pricing, full-service.
• Patriot, lowest-cost full-service option.

Whichever you choose, the payroll service files federal, state, and local taxes for you, issues paychecks or direct deposit, and produces year-end W-2s. The cost is worth every dollar.

9. The first 30 days

The single biggest predictor of whether a new hire works out is what happens in their first 30 days.

• Have a written plan for week one. What they'll learn each day, who they'll meet, what they'll produce.
• Daily check-ins for the first week. Fifteen minutes, end of day. What worked, what didn't, what's confusing.
• 30-day review. What's going well? What's getting in the way? Should anything change? This is also when you confirm fit.
• Set 90-day goals in writing. They should know exactly what success means.

10. Common mistakes

• Hiring before you can afford to. If your cash flow can't cover the salary + 30% for six months, you're not ready.
• Hiring someone like you. You don't need a duplicate of yourself; you need complement.
• Waiting too long to address problems. If something isn't working at 60 days, address it. Hope is not a management strategy.
• Classifying as 1099 when the relationship is W-2. Covered above. Expensive when it goes wrong.
• Skipping the offer letter. Verbal agreements lead to misunderstandings every time.