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Entrepreneur’s Checklist for Hiring New Employees

the entrepreneurs checklist for hiring new employees

Entrepreneur’s Checklist for Hiring New Employees

  March 6, 2019
 

Startups that succeed start lean and it’s a mindset you need to have because the wrong employee is incredibly expensive. The U.S. Department of Labor estimates that the average cost of a bad hiring decision can equal 30% of the individual’s first year potential earning. If you’re a startup with little to no sustainable income then a wrong employee ranges from disastrous to fatal. Not only does a wrong hire waste productivity, it can actually cause surrounding employees to lose effectiveness. [1]

Below is a good checklist for hiring new employees:

1. Make your job description clear: Often the determining factor when hiring the wrong employee is an unclear job description. It’s crucial you’re crystal clear about what exactly the job entails, with a detailed description of how the employee is expected to perform. In addition, you must know exactly what type of person fits the job description well. Every employee is just as important as your technology.

2. Keep record of potential employees: You need to track each candidate, including their strengths, weaknesses, expectations and interview notes. Throughout the hiring process this information becomes valuable when you begin to cross names off your list.

3. Run background checks: It’s highly recommended you run a background check on every employee. Ensure you have a consistent policy in place so every employee knows what is being checked. For instance, as the founder you’ll want to run a background check that reviews criminal records, driving records, and any watch lists. It’s also recommended to run a check of credentials and/or credit score.

4. Know your EIN: Once you’re ready to hire employees you will need an Employer Identification Number (EIN) from the IRS. An EIN is required to pay business taxes based on the number of employees you have. You only need 1 EIN number which covers the entire business.

5. Have your taxes in order: Every business in the U.S. must keep records of their taxes. Each business is required to withhold money from every employee’s paycheck to ensure taxes are paid correctly. There are two forms which must be completed: W-4 and W-2. The W-4 form is used for every employee and it must fill out before they begin work. This provides you with the correct information for taxes. The W-2 form is sent to the employee and IRS. It shows all taxable income including retirement contributions and benefits.

6. Have a proper payroll system: There are two options for this. Do payroll internally or outsource to a company like Workday or ADP. Either way, make sure you’re addressing your business’s payroll needs.

7. Obtain business insurance: All businesses with employees are required to have workers compensation insurance. You can do this through a couple of ways, the most common are to have a broker, self-insure, or through your state’s Workers Comp Insurance Program. Many startup founders neglect to buy insurance until it’s too late, and they’re forced to pay out of pocket for issues which will eventually happen. Don’t let that happen to you.

8. Keep a file on every employee: It’s vital to keep information on file for all employees. This provides the company with a barrier for any problems which could or could not occur. For instance, some of the data you’ll want to keep is full name, address, emergency contact, a copy of signed contract, and any reprimands or accolades within the company.

This checklist provides you with all the necessary steps to onboard a new employee. Your staff are crucial to the company’s success. Nobody can run a business in a vacuum, and now you’ll know what to look for and what to avoid. Good people are difficult to find, but if you’re at this stage then luckily you already know what you’re doing.

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Tandon GroupEntrepreneur’s Checklist for Hiring New Employees