How to hire employees for your small business: Complete guide and best hiring practices

Imagine a small retail store that’s constantly bustling with customers. The owner wears a ton of hats, juggling managing inventory, working with customers, and handling finances. This is a common challenge for small businesses: Hiring the right employee isn’t just about filling a role—it’s about finding someone who can contribute to your business’ growth and success.

In this guide, we’ll walk you through the steps to take to hire employees for your small business, from defining their role to getting an employer identification number, writing a job description, sourcing candidates, onboarding, and more.

Along the way, we’ll also share best practices to streamline the hiring process—like using Rippling to automate processes like onboarding and payroll. By the end of this article, you’ll know how to hire your first employee—and have the knowledge and tools you need to find the right new addition to your team.

How to hire employees for your small business

Looking for a checklist for hiring employees? There are a few steps involved to make sure you find the right fit for your team. The process starts with defining your needs and continues through hiring and onboarding a new team member. Here’s what to do.

1. Define what you need an employee for

Start by clearly defining the role you need to fill. What tasks and responsibilities will the employee handle?

Consider the type of worker you need: seasonal? Part-time? Full-time employee? For example, if you run a coffee shop and need a hand with the morning rush, a part-time barista might be ideal. On the other hand, if you run a retail store and you need help managing inventory and balancing the books, a full-time bookkeeper or account manager might be what you’re looking for.

Creating a detailed list of duties helps you understand the skills and experience required for the role, which in turn can help you attract suitable candidates.

2. Get your employer identification number (EIN)

An Employer Identification Number (EIN) is a unique identifier assigned by the IRS for tax purposes. As a small business owner, you need an EIN to legally hire employees. You can apply for an EIN online through the IRS website.

To register for an EIN, you will need:

• Your Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN).
• The legal name and structure of your business.

You must also be the “responsible party” for the business, meaning you control, manage, or direct the entity and the disposition of its funds and assets, in order to apply. Note that you can only access the online EIN application Monday through Friday from 7am to 10pm Eastern time.

You can also apply by fax or mail by filling out IRS Form SS-4. Fax the completed form to 855-641-6935, or mail it to:

Internal Revenue Service
Attn:  EIN Operation
Cincinnati, OH 45999

3. Write the job description

A well-written job description is essential for attracting the right candidates. Once you’ve defined the responsibilities of the role, you can use those to form the foundation of the job description.

The job description should clearly outline the role, responsibilities, and qualifications required. It should include:

• The job title
• A brief overview of your business
• Specific duties the employee will perform
• The skills, experience, and education needed for the role
• Any preferred qualifications
• The type of employment (full-time, part-time, seasonal, etc.)
• Work hours, location, and salary range

A comprehensive job description not only helps attract the best, most qualified candidates—it also properly sets expectations for potential new hires.

4. Post the job listing and screen applicants

Once you’ve written the job description, the next step is to post the job. Use a variety of platforms and job sites like Indeed, LinkedIn, or industry-specific sites and job boards—whatever is the best fit for your industry or business. You might also consider sharing the job posting on your business’ social media pages and website.

When applications start coming in, you’ll need a process for screening them effectively. Look for applicants whose skills and experience match the job description. Pay attention to their work history, educational background, and any relevant training or experience. Create a shortlist of candidates who meet the qualifications you’re looking for—they’ll move on to the next step in the process.

The screening step can be tricky. Not only can it be time-consuming to sort through a potentially large number of job applicants, but doing so without bias can be a major concern. Tools like applicant tracking systems (ATS) can help you build a fair, repeatable hiring process while simplifying and streamlining many of the steps.

5. Interview candidates

Interviewing potential new hires is a critical step in the hiring process because it gives you a chance to assess their suitability beyond what’s written on their resume. Prepare a list of interview questions that explore both their technical and cultural fit. This will include asking about their previous experience, problem-solving abilities, how they handle challenges relevant to the role, what they value in a job, how they handle conflict, and why they left (or plan to leave) their previous role—just to name a few examples.

During the interview process, you can try to gauge their interest and enthusiasm in your business. And conducting multiple rounds of interviews and involving different team members and stakeholders can give a more complete, well-rounded perspective on each candidate before you make a final hiring decision and extend a job offer.

6. Conduct background checks

Conducting background checks helps make sure you’re hiring trustworthy and reliable employees—and mitigating potential risks to your business when you hire an employee. The background check process helps verify the accuracy of the information the potential new hire provided during the recruiting and interview process, plus it can reveal any potential red flags about their history or background.

Common background checks in the US include employment history, education verification, and criminal records checks.

To conduct a background check, it’s common to use professional services or online platforms to streamline the process and help comply with legal requirements and regulations. Make sure to get your prospective new employee’s consent before initiating any background checks, as well as complying with legal requirements in non-US jurisdictions, which can require much more stringent data privacy safeguards and may ban certain types of background checks altogether.

7. Check employee’s eligibility to work in the U.S

When onboarding a new hire in the US, employers are required to verify that they have the legal eligibility to work in the country, regardless of their citizenship status. To do so, employers use Form I-9, also known as Employment Eligibility Verification. The process must be completed within three business days of the employee's first day of work.

When hired, the new employee must provide information about their identity and work authorization in Section 1 of the form. Then, they show documents to their employer (a list of acceptable documents is available on the US Citizenship and Immigration Services website). Employers inspect the documents, record information about them in Section 2 of the I-9 form, and sign and date it. 

Employers must retain their employees’ forms and copies of their verification documents for three years after their employment start date or one year after their end date—whichever is later. They must also allow authorized government officers to inspect them on request. Failure to comply with these rules could result in government penalties.

Since the COVID-19 pandemic, remote I-9 verification can be done via an online system called E-Verify that uses live video to allow employers to inspect their new employees’ verification documents. Employers must meet certain requirements and remain in good standing in order to enroll in and use E-Verify.

8. Set up payroll

Setting up your new employee to get paid—accurately and on time—is a crucial initial step once you’ve chosen who to hire. There are three main steps:

1. Choose a payroll method: Determine whether you’ll handle payroll in-house or use a payroll service. While managing payroll yourself can help you save money (often important for small businesses operating on a budget), using a provider can help you save time and reduce errors—especially if you don’t have expertise in payroll processing. A good middle-ground can be payroll software, which streamlines and automates parts of the process.
2. Decide on payroll frequency: Common payroll frequencies include weekly, bi-weekly, and monthly. Choose a frequency that meets your business needs (and your employees’ needs) and complies with any state or local regulations.
3. Understand payroll taxes: Familiarize yourself with federal, state, and local payroll tax requirements. This will include withholding federal income tax, Social Security and Medicare taxes (FICA), and any state-specific taxes. You’ll also need to pay the employer’s portion of each tax and file any required quarterly and annual tax returns. Using payroll software or a payroll service often includes filing returns and making withholding payments on your behalf.

9. Onboard new employees

You’ve found the right new employee and it’s time to get to the final step before their first day: onboarding.

Employee onboarding is more than just an orientation—it’s about creating a foundation for a good working relationship that lasts well beyond your new hire’s first few days, weeks, or months. Onboarding is when you show them the ropes, introduce them to your company culture, and help them transition into their new role so they feel comfortable, supported, and able to succeed.

One of the first steps in the onboarding process is to send your new employee an offer letter, which should include their job title, supervisor, salary, start date, and any other important details about their job offer.

Once their offer letter is signed, you can send them their new hire paperwork and get them enrolled in any employee benefits you offer (small business benefits, from health insurance to retirement plans to paid time off to workers’ compensation insurance, can help attract and retain top talent).

Other onboarding steps can include:

• Provisioning apps, tools, and devices
• Assigning training
• Sending a welcome email
• Scheduling a team outing

And keep in mind that onboarding lasts longer than just a new employee’s first day—scheduling later check-ins (for example, at 30, 60, and 90 days) can help them feel supported and give them feedback as they grow more comfortable in their new role.

Rippling: Easy hiring for your small business

With Rippling, small businesses can hire more efficiently. Rippling Recruiting helps streamline the recruiting and hiring process, with two-way interview scheduling, interview panels, feedback to help eliminate bias from the process, and candidate experience surveys so you can improve your processes over time.

And once you find the right new employee for your business, Rippling can streamline much more—as soon as their offer letter is signed, Rippling automatically allows them to enroll in employee benefits, assigns training, conducts background checks, and more. Your onboarding checklist is fully customizable.

How to find employees for your small business: 4 tips

Finding the right employee for your small business takes more than just posting a job opening. Taking a strategic approach to small business hiring practices can help you attract and select the best candidates—and the tips below can help you in your search for a new employee.

1. Write a good job description

A good job description is a must for catching the eye of qualified job seekers. There are a lot of job postings out there—which means yours will need to stand out to attract top talent.

Start by clearly defining the job title, duties, and responsibilities associated with the role. If the job isn’t clear, candidates are likely to skip over your listing. Take time to highlight the skills, experience, qualifications, and attributes they need to succeed. Also be sure to emphasize how the position aligns with your business needs and company culture. This can help potential candidates see how they might fit in at your company.

Post the job listing on social media sites like LinkedIn, job board, and even your company website—you want to reach a wide audience to make your recruiting efforts as effective as possible. As applications start to come in, review each resume carefully to see how the candidate’s qualifications line up with your job description.

2. Understand your company values

Before even beginning the recruitment process, it’s important to have a clear understanding of your business’ values, which should then be reflected in your job listings and communicated to job seekers during the hiring process. Emphasizing your company’s values during the recruitment process can help attract candidates who align with your business ethos and are more likely to be a good cultural fit.

You can carry this through the entire process—for example, when writing a job offer, include information that supports your business values, like offering a competitive salary and an employee benefits package. This can help your business stand out and attract the best candidates who are genuinely interested in being a part of your team.

3. Read the applicants’ resumes thoroughly 

When you start receiving resumes, review them carefully and look for key qualifications and experiences that match the job requirements you’re looking for. Pay close attention to cover letters too, since they can provide additional insight into job seekers’ personalities and motivations for applying.

Thoroughly reviewing candidates’ resumes and other application materials not only helps you identify job seekers who meet your technical requirements for the job you’re looking to fill, but also those who exhibit a strong interest in your business. Taking extra time during the recruitment process to review each candidate can help you find an employee who is really the best fit—and who can help your business grow to new heights.

4. Know interviewing best practices

Conducting effective interviews is an extremely important part of the recruitment process—but it can be difficult for those who aren’t experienced. Here are some best practices to help you conduct interviews that will narrow your search down to the best candidates, no matter what role you’re trying to fill:

• Prepare thoroughly. Before the interview, review the candidate’s resume and cover letter. Prepare a list of interview questions tailored to the job role, focusing on both technical skills and cultural fit.
• Ask open-ended questions. Use open-ended interview questions that encourage candidates to provide detailed responses. For example, instead of asking “Do you have experience with customer service?” ask “Can you describe a time when you diffused a difficult situation with a customer?”
• Use a structured interview format. Consistency is key in the recruitment process. Use a structured interview format where each candidate is asked the same set of questions. This helps keep things fair and gives you a way to more easily compare candidates.
• Take notes. While you conduct interviews, take detailed notes on the candidate’s responses. This will help you remember their answers and make a more informed decision when evaluating multiple candidates.
• Encourage questions from candidates. Allow time for candidates to ask their own questions. This not only helps them understand if the role and company are a good fit for them, but also provides insight into what they value and prioritize.
• Involve multiple interviewers. If possible, involve multiple team members in the interview process. This provides different perspectives on the candidate and helps you make a well-rounded hiring decision.
• Follow up. After the interview, follow up with candidates promptly. Provide feedback if possible, and inform them of the next steps in the recruitment process. This helps maintain a positive candidate experience.

FAQs on how to hire employees for a small business

How do I set up an employee for my small business?

When you set up a new employee for your small business, your goals are compliance and smooth integration. Start by extending a formal job offer to the selected candidate, outlining their role, salary, and any employee benefits. Once they accept the offer, complete new hire reporting as required by your state. This typically involves reporting the new hire's details to the state’s new hire registry within a specified timeframe.

Next, enroll the new employee in your company's payroll system and benefits programs. Make sure they complete all necessary paperwork, including tax forms and direct deposit information. Providing a thorough onboarding process will help your new hire feel welcomed and prepared to contribute effectively.

How do you pay your employees when starting a business?

Start by determining your payment frequency (weekly, bi-weekly, or monthly) and establishing a payroll schedule. Make sure to withhold the appropriate payroll taxes from each paycheck and remit them to the IRS and state tax agencies. Understanding your payroll tax obligations and maintaining accurate records will help you avoid penalties. 

You can process payroll manually, or, to save time and effort, use payroll software or a payroll service. A payroll service can help you calculate salaries, withhold payroll taxes, and make timely payments.

What is the minimum number of employees for a small business?

The definition of a small business can vary by industry. There is no minimum number of employees required to be considered a small business. Many small businesses start with just one or two employees and grow over time as the business expands.

How do you know when to hire in your small business?

Knowing when to hire a full-time employee in your small business can be challenging. Signs that it’s time to hire include:

• Consistent overwork
• Declining service
• Missed business opportunities due to a lack of manpower

If your current employees are stretched thin or you find yourself turning down new business because you can't keep up, it might be time to bring on additional help. You also don’t need to start with a full-time employee—you can hire part-time help to start.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.