When (and How) to Hire Your First Employee

You feel like you are ready to hire your first employee, so what should you know and when should you do it? That is the topic for today, and it's an exciting time for you when you're in the process of, of hiring that first employee because it's really the first time where you are taking something that you created and trying to make it bigger than yourself, and that is what happens when you're starting to bring other people into the fold.

And so there's a lot of, uh, nervousness, one, 'cause you'll be managing someone, which m- you may have never done before.

There's also a lot of, um, fear because you are now taking on the responsibility of someone other than you within the business, and that brings on liability, that brings on, uh, just the cost of having to manage another employee.

And so all of that combined really makes it a nerve-wracking time.

So the first thing to do when you are evaluating this is first to understand what is the metric that you're using that is determining that you actually need to hire someone.

It can be, uh, you're turning down clients.

You can...

It could mean that you are, have so many contractors and freelancers that it would just be easier if you had a full-time employee.

Um, it could be a, uh, capacity concern.

All of these sorta things i- can play into this.

You need to sorta figure out what is the reason that you would want to hire a first employee.

And when you have started to see that come into fruition, then that is when you know it is time.

The second thing to do when you're ready to actually go and hire is you need a employment contract.

This is something that people kinda wanna gloss over 'cause they don't like to hire lawyers for, for, for obvious reasons.

They're expensive and whatnot, but the right agreement for, uh, an employee is gonna really protect you in the long run.

It also helps you determine what is w- the, the framework of the, um, the relationship.

And so what is expected of them, what is expected of you, and that sort of thing, and it's ver- it's much more clear.

So it's an important component that people do not always want, but they should have.

You should also, if you're hiring, also ensure that you have the right business structure in place because now you're taking on a little bit more liability.

You wanna make sure you have liability protection, and that's where you speak to a lawyer about the right structure for, in this case.

Um, but that'll allow you to have the EIN, the, uh, payroll that's required, and all that sorta thing, because you're gonna need that in place in order to now pay a salary.

Because the big thing about hiring versus, you know, just contractors and whatnot is, um, when you're doing a W-2 employee, like, you have to pay them every two weeks if you're on a, you know, a two-week cycle.

Um, and just because money hasn't come in, well, you still have to pay it 'cause they're on a salary, or, uh, they, the agreement says that they have to be paid a certain amount every two weeks.

And you can't just not do that, because then they will go to the labor board, and you will get hit with huge, huge fines if you were to do that.

And so having that in place is gonna be really important because of that concern.