Hiring the first employee

Last updated: June 8, 2026

Hiring the first employee requires some preliminary work, such as displaying workplace posters and purchasing workers’ compensation coverage. Once these steps are completed, the process is much like any other hire. Specifically, employers must advertise an open position, prescreen and interview applicants, and extend a conditional offer to the most qualified candidate.

This guide is intended for small business owners and HR professionals. It can help them develop a strategy to hire their first employee and compete against larger organizations for talent.

Hiring the first employee key takeaways:

• Preliminary steps to hiring a first employee include applying for an EIN, creating employee handbooks, displaying workplace posters, obtaining worker’s compensation insurance and setting up a recordkeeping system.
• Hiring an employee entails defining job responsibilities, writing and advertising job ads, prescreening and interviewing candidates, extending an offer, and conducting reference and background checks.
• Showcasing a positive workplace culture, personalizing benefits packages and emphasizing career advancement opportunities can help small businesses compete with larger organizations for talent.

Small business owners with a growth mindset will inevitably need to hire employees. This prospect may seem daunting given that large organizations often have expansive budgets, generous benefits packages and career development programs to attract people. Yet, the search for talented candidates need not result in a small pool of mostly unqualified job seekers. With the right hiring strategy, small business owners can successfully compete for and hire employees.

Before making the first hire

Before the candidate search even begins, some housekeeping is necessary to ensure a small business is ready for employees. Responsibilities include applying for an employer identification number (EIN), creating an employee handbook, displaying workplace posters, applying for workers’ compensation insurance and setting up a recordkeeping system.

Apply for an EIN

If an EIN wasn’t obtained when the business was created, now is the time to get one. It is necessary for payroll and tax administration purposes. Employers can apply for an EIN via the IRS website.

Create an employee handbook

Although employee handbooks are not legally required, they can help document any policies or notices needed to comply with federal, state or local laws. Some of the notices that may be mandatory, depending on the jurisdiction include:

• Paid sick leave
• Harassment prevention
• Wage payment
• Leave rights
• Antidiscrimination policies
• Safety-related information

Display workplace posters

The U.S. Department of Labor (DOL) and state and local labor departments require many businesses to display workplace posters in areas readily observable by employees. Violating these requirements may result in fines, citations or other penalties, depending on the poster and jurisdiction.

For more information on federal requirements, employers should refer to the DOL’s FirstStep Poster Advisor. State and local agencies may have their own posting rules, which can be more extensive.

Purchase workers’ compensation insurance

Workers’ compensation insurance generally covers medical costs, rehabilitation expenses, certain lost wages and other benefits if any employees suffer a work-related injury or illness, subject to state law. In most states, employers must carry workers’ compensation insurance, though coverage thresholds and exemptions vary. For instance, some states require coverage based on the number of people employed; others may have industry, ownership or payroll thresholds.

Create a recordkeeping system

Small businesses have a lot to keep track of – expenses, gross income and assets to name a few. The list only gets bigger as people are hired and may necessitate a robust recordkeeping system. Details that must be saved for each employee include but are not limited to the following:

• Name and date of birth
• Occupation
• Workweek days
• Hours worked
• Regular pay rate
• Overtime pay
• Deductions from wages
• Pay period covered
• Pay dates
• Retroactive payments
• Paid time off (PTO)
• Union agreements (if applicable)

How to hire employees for a small business

Employers can prepare to hire not just any employee, but the right employee by following these steps:

1. Define the requirements and responsibilities
2. Write the job description
3. Advertise the job opening
4. Prescreen candidates
5. Conduct interviews
6. Make an offer
7. Conduct reference and background checks

Defining responsibilities and requirements

Finding a candidate with the skills needed to help a business achieve its objectives starts with identifying the responsibilities and requirements of an open position. Factors to consider include:

• Essential functions – Core responsibilities can include day-to-day activities, as well as tasks that recur at irregular intervals.
• Supervision – Employers may want to consider the level of job autonomy and whether or not the individual will manage a team in the future.
• Physical demands – Candidates should know in advance whether a job requires them to sit for extended periods, stand, walk, bend or lift heavy objects.
• Relevant experience – The number of years spent working in an industry may be equally important to experience in specific roles.
• Education – Beyond higher education, some roles require specialized licenses and certifications.

Writing a job description

In clear, concise language, a job description should list the following:

• Job title – Create titles that are easy to understand; avoid abbreviations and special characters.
• Location – Use the metropolitan area closest to the workplace to expand reach.
• Company description – Highlight the company’s industry, products and services, and mission and goals.
• Job description – Include the aforementioned responsibilities and requirements, as well as growth opportunities, employer-sponsored benefits and company culture.
• Equal Opportunity Employer statement – Avoid language that could discourage applicants based on protected characteristics and consider adding reasonable accommodation contact information for applicants who need assistance with the application process.

Advertising the open position

Getting a job ad in front of the right eyes usually requires a medium that reaches multiple groups of candidates. Some options include:

• Online advertising – There are many websites available to job seekers, both free and paid, that offer different levels of service for employers advertising on them.
• Newspapers – Although slowly becoming outdated, advertising in newspapers can be effective when hiring employees for manual, administrative, entry-level or local positions.
• Staffing agencies – Outsourcing may be helpful for employers who don’t have the time or resources to do their own recruiting, need to hire for a highly specialized position, or are seeking temporary employees.
• Trade journals – Advertising in trade journals is best when recruiting vocational or specialized skills, such as medical or technical positions.
• Professional associations – Like trade journals, professional or alumni associations can help source candidates with specialized skills or years of experience.
• Career fairs and career centers – Attending career events is best for finding entry-level employees, with the added benefit of meeting people in person.

Prescreen candidates

Once the resumes start coming in, employers might use prescreening tactics to help them determine which candidates they want to interview. Job application forms, pre-employment questions or tests that gauge job-related knowledge can all be used for this purpose.

Conduct interviews

Interviews usually begin with a phone call to gather preliminary information about applicants. Strong candidates are then invited for an in-person meeting to further assess if they are a good fit for the job. Video conferencing can also be used if an in-person interview is not feasible due to geographic reasons.

Whichever interview method is chosen, employers may want to follow some basic guidelines:

• Prepare – Set aside adequate time prior to the interview to review the candidate’s application.
• Be consistent – In the interest of fairness, develop a core set of questions and stick to them.
• Ask only job-related questions – Federal, state and local laws protect job applicants from discrimination based on race, color, religion, sex, national origin, age, disability, genetic information or military status. Many state and local jurisdictions include additional protections beyond those at the federal level.
• Consider behavior-based questioning – Asking candidates how they would handle a situation they might encounter in their prospective jobs can provide insight into their character and competence.
• Take notes – It is helpful to reference notes when reviewing all candidates and finalizing a hiring decision.

Make an offer

A conditional offer can start with a phone call, followed by a letter that outlines:

• Job title
• Pay
• Anticipated start date
• Supervisor
• Summary of benefits
• Employment at-will relationship (recognized in all states except Montana)
• The contingent nature of the offer (pending background or reference check, and/or drug test)

Run background checks

Depending on the industry and the position being filled, employers may want to inquire about a potential employee’s work and education experience, criminal records, driving records or credit reports. These inquiries may be restricted in certain jurisdictions and require employers to follow strict guidelines.

For example, if employers conduct a background check through a third-party reporting agency, they must abide by the rules of the Fair Credit Reporting Act, which include:

• Notifying the individual in writing that a background check will be conducted for employment purposes. The notice must be a separate document from the application form.
• Obtaining the individual’s written authorization.
• Conducting background checks equally for all candidates to avoid discrimination.
• Ensuring background checks are job-related and follow applicable federal, state and local rules.

Check references

Reference checks can help verify information provided by candidates in employment applications, resumes and interviews. For instance, a hiring manager may want to confirm the dates of prior employment and the positions held. Most employers are willing to disclose this type of information, but they may be less inclined to provide details on employee performance or conduct-related issues.

Some general guidelines for checking references include the following:

• Check references at an appropriate time.*
• Contact current and former employers only after obtaining authorization from candidates to avoid jeopardizing their employment.
• Contact references directly via phone even if a candidate provides a letter from a reference.
• Seek only job-related information from references.

*Note: It's generally considered a best practice to wait until a conditional offer of employment has been extended to a candidate before verifying references. If reference checks occur earlier in the hiring process, employers should use consistent timelines and confirm that they can lawfully obtain the information requested before extending an offer.

Tips on hiring employees for a small business

Competing for talent with larger organizations can sometimes feel like an uphill battle, but it doesn't have to. To achieve better results, small businesses need to effectively communicate all that they have to offer job seekers. Engaging workplace cultures, personalized benefits and defined career paths may all be enticing to them.

Emphasize workplace culture

To connect with a potential employer, people need to know what it feels like to work there. Delivering such an inside perspective can be accomplished by promoting the employee experience in recruitment ads and on company websites and social media. Specific tactics include:

• Asking current employees to write blogs or testimonials discussing their experiences working with the organization
• Sponsoring nonprofit and community events attended by employees
• Using photos of actual employees rather than stock photography
• Publicly celebrating employee accomplishments, including work anniversaries, promotions, educational achievements, etc.

Personalize benefits

Attracting candidates to an organization doesn’t always require comprehensive benefits packages and formal professional development programs. Sometimes, understanding what’s most important to people and makes them feel valued can be just as effective.

Flexible schedules are often a good place to start because many people today appreciate a positive work-life balance. Employers might also consider generous perks, like stipends, to help employees cover the cost of home internet, car insurance or pet insurance.

Once a few people are hired, employers can further personalize their benefits packages. Surveys work well for finding out what offerings resonate with employees.

Note: Stipends or reimbursements are generally treated as taxable wages unless specific exclusions apply. Employers should review payroll tax rules and consult a tax advisor as needed.

Define career paths

Merely mentioning “growth opportunities” in a job ad may not be enough to attract talented people who want to see a pathway to their potential future up front. Instead, employers should specify how long it typically takes to assume additional responsibilities and get promoted. They can also emphasize how employees in small organizations get to play multiple roles and learn new skills. Tuition reimbursement and mentorship programs, if available, should be advertised, too.

Hiring an employee remotely

Beyond the lack of in-person contact and the need for video conferencing, hiring people remotely requires additional measures to ensure they fully engage with the organization. Here are three tips to help remote new hires acclimate quickly:

Stay organized

Create an agenda with all the tasks that must be completed before the remote worker starts and during the first few weeks on the job. For example, a remote employee may need work-related equipment, a fleet vehicle, system credentials or other assets delivered in advance.

Communicate often

Send a series of personalized emails introducing the remote employee to the organization. These communications can include orientation videos, e-learning modules, policy and procedural information, the organization’s history, product or service lineups, and company directories.

Show appreciation

A remote employee’s first day should have as much fanfare as someone working on site. People who are warmly welcomed tend to have a stronger connection with the organization from the start.

Frequently asked questions about hiring employees for small businesses

This article is intended to be used as a starting point in hiring employees for your small business and is not a comprehensive resource of requirements. It offers practical information concerning the subject matter and is provided with the understanding that ADP is not rendering legal or tax advice or other professional services.