What to Do Before Hiring Employees: The Smart Business Owner’s Checklist for Getting It Right the First Time

Hiring your first employee can feel like a thrilling milestone—or a terrifying leap into the unknown. Either way, it’s a moment of transformation for your business.

But here’s the hard truth: hire too soon, too fast, or without the right prep, and you risk more than just a bad fit. You risk costly payroll mistakes, tax penalties, workplace disputes, or a toxic culture that drains you and stalls your momentum.

This guide will walk you through exactly what you need to do before hiring your first employee. Because smart hiring doesn’t start with a job post—it starts with a plan.

1. Don’t Hire Yet—Define What You Actually Need First

Before you even think about candidates, step back and assess: what problem are you solving by hiring?

Be specific:

What tasks are taking up too much of your time?
Are you losing money or momentum because you can’t do everything yourself?
What’s the exact outcome you want this person to deliver?

Define the role, responsibilities, and expected outcomes clearly. Decide if it’s full-time, part-time, or project-based. Outline what success looks like in the first 30, 60, and 90 days.

Hiring without clarity leads to mismatched expectations—and poor performance.

Easily administer one-click skill tests with workscreen. -This way you can Assess candidates based on real-world ability—not just credentials like résumés and past experience. This helps you hire more confidently and holistically.

2. Ask Yourself: Employee or Contractor?

You might not need an employee right away.

If the work is:

Temporary or project-based
Outside your core business
Doesn’t require close supervision

…a 1099 contractor could be a better fit. But be careful: misclassifying employees as contractors is illegal and could lead to fines.

If you’re directing when, where, and how the work is done, you’re likely dealing with a W-2 employee—and you need to follow employment laws accordingly.

3. Get Your Legal and Financial Infrastructure in Place

Before you bring someone on board, make sure your business is legally ready to employ people.

Here’s what you’ll need:

Employer Identification Number (EIN) from the IRS
Business registration with your state
Workers’ compensation insurance (if required in your state)
Payroll system to handle taxes, withholdings, and payments
A written budget that includes salary plus taxes, insurance, and benefits

Hiring costs more than just a paycheck. Expect to pay 15–25% more than the base salary once you include employer-side taxes and other expenses.

4. Write a Job Description That Attracts (and Filters) the Right People

A vague job post like “need someone to help with admin” won’t cut it.

A good job description includes:

A clear job title
Daily responsibilities
Required qualifications and soft skills
Pay range (mandatory in some states)
Company values and culture
Expectations for professionalism, punctuality, and communication

This isn’t just for show—it helps candidates self-select and keeps misaligned applicants away.

Eliminate low-effort applicants—including those who use AI Tools to apply, copy-paste answers, or rely on "one-click apply." This way, you focus only on genuine, committed, and high-quality candidates—helping you avoid costly hiring mistakes.

5. Prepare the Hiring Paperwork

Once you’ve made an offer, be ready with the required documents:

W-4 (federal tax withholding)
State tax form (e.g., NJ-W4)
I-9 form (employment eligibility verification)
Direct deposit authorization
New hire reporting to your state’s directory (must be done within 20 days in most states)

Also, check if your state requires E-Verify or specific labor law posters (even for remote employees).

6. Don’t Skip the Background Check

Before the hire becomes official, run a background check—especially if the employee will have access to customer homes, sensitive data, or financial information.

This isn’t about paranoia. It’s about trust, safety, and protecting your reputation. Just make sure your screening process complies with federal and state laws.

7. Set Up Payroll Before Day One

Payroll isn’t just about writing checks. It includes:

Withholding and paying taxes
Filing quarterly reports
Complying with wage laws (like overtime and minimum wage)

A reputable payroll service can automate this and save you from major headaches. Manual payroll may seem cheaper at first, but it’s easy to make costly mistakes.

Also decide: Will you pay employees weekly? Biweekly? Monthly? Be consistent and compliant with your state’s wage laws.

8. Create a Simple Onboarding and Training Plan

Your first hire sets the tone for your team culture. Don’t just throw them into the deep end.

Instead:

Draft a basic employee handbook
Define company policies (e.g., time off, phone use, lateness)
Schedule a formal onboarding session
Set goals for their first week and month
Show them what “great work” looks like

Even a one-person team needs structure.

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9. Think Long-Term: How Will You Retain This Person?

You may not be able to offer a full benefits package, but that doesn’t mean you can’t be competitive.

Here are low-cost benefits that matter:

Flexible hours
Remote work options
Paid time off (even just a few days)
Health stipends or QSEHRAs (qualified small employer reimbursement plans)
Performance-based bonuses
Paid training or development

Employees stay where they feel respected, challenged, and cared for. Build that from day one.

10. Document Everything. Seriously.

If problems arise later—tardiness, poor performance, even termination—you need documentation.

Keep records of:

Offer letters and signed forms
Onboarding documents
Performance reviews or informal feedback
Any disciplinary actions or warnings

This protects you from unemployment claims or legal disputes.

Common Mistakes to Avoid (Straight from Real Business Owners)

Hiring friends and then regretting it
Paying too much too soon—and watching motivation drop
Not clearly defining the role before hiring
Skipping paperwork or assuming it’s “just a formality”
Thinking employees will be as invested as you—they won’t

Final Thoughts: Hire Like a Leader, Not Out of Desperation

Bringing on your first employee is not just about relieving your workload—it’s about laying the foundation for a team that can help your business grow sustainably.

It’s tempting to rush the process, especially when you’re overwhelmed. But planning ahead, protecting yourself legally, and onboarding with intention can save you from the costliest mistake of all: a bad hire.

Treat this first hire like a blueprint. Because the systems you build now will shape every future employee—and ultimately, the success of your business.

The best hiring teams are those that treat recruiting like product development:

Test constantly
Iterate quickly
Put the user (your candidate) at the center

These best practices aren’t just for show—they’re your strategic edge in a talent-constrained, high-expectation world.

Whether you’re a startup founder hiring your first employee or an HR leader revamping an entire process, one truth holds: better hiring isn’t luck. It’s intentional.

Make it your advantage.