How to Hire an Employee

By Trevor Onions , last updated November 18, 2011

Any manager or small business owner is putting their professional reputation on the line any time they bring in a new person, and learning how to hire an employee is one of the most important skills to master. Selecting quality candidates for the jobs you have available is no easy process. The same goes for dealing with the many Federal regulations and tax preparations that needs to take place, especially for smaller businesses. Still, it's not impossible. Businesses are hiring new workers every day, and here's how you can do it with confidence.

Finding Quality Employees

Once you've decided it's necessary to hire a new employee, the web is an enormous asset in locating high quality workers. Start by creating a detailed list of the job's responsibilities, pay, and benefits. Then post the position on sites like Craiglist, Monster, and all state employment agencies that accept postings from businesses. In the present environment, job seekers are plentiful, so there isn't much reason to pay local newspapers to post classifieds in print or online, but it's always an option.

An excellent screening process is to look for referrals. Existing employees, colleagues, or other business owners you interact with may instantly have a well qualified person to recommend. Having someone who is vetted by a trusted source up front can save you great amounts of time and energy while sifting through unknown prospects.

After you receive the desired number of responses, sort out the most qualified resumes, or have a Human Resources person do it for you. Calling in candidates for the interview process is the next part of the process, and the key to finding quality is to ask probing questions, rather than traditional ones. There's nothing wrong with assessing the personal elements of a potential worker, but your questions should center around how they will perform essential job duties. For instance, if you're hiring a software programmer, try giving them a hypothetical scenario, and ask them to cite specific examples of balancing deadlines.

Preparing to Hire

Before you can make a decision and actually let someone start working, meeting the guidelines for insurance and taxes is critical. First, ensure that all Federal obligations are taken care of. New employees must be supplied with forms for verifying their tax liabilities and identity. I-9 and W-4 forms are the most common, and both need to be filled out by the employee, and then passed on to the IRS.

As an employer, you'll be responsible for paying Medicare, Social Security, and additional income taxes. Make sure to include these with your regular quarterly estimated tax payment. Filing a 941 form is the easiest way to take care of these new responsibilities.

Don't forget to follow state guidelines as well. Many states have specific rules requiring you to register new hires with the state, and begin paying unemployment insurance taxes. Additionally, carrying insurance like workers' compensation and disability protection is mandated across the country.

The biggest steps you can remember about hiring an employee are to be prepared and try to get what you pay for. Meeting the elaborate regulatory requirements is a challenge for new employers, but selecting potential employees that are qualified and committed to the job will make the effort and expense worthwhile.

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