How do you know when to hire your first employee?

Start by defining the potential duties and responsibilities of your first employee. Find tasks that your business needs to complete every week or upcoming projects that require the skill set of a new hire. Typically, when your list of ongoing and planned tasks sum up to 20 or more hours per week, consider bringing in your first employee.

Here are some other signs that it may be time to hire your first employee:

• No time off in weeks
• Spike in customer complaints
• Frequently needing to extend your deadlines
• Inability to start new projects or take on clients
• Regularly falling short on goals

How to hire your first employee step by step

Follow these steps to hire your first employee:

1. Get ready for the hiring process

2. Attract the best candidates

3. Identify your ideal candidates

4. Bring the top candidate on board

5. Track your results

1. Get ready for the hiring process

Before hiring your first employee, there are some preparations to consider, like your budget and legal obligations. Here are the steps to take:

Determine the type of employee you need and what you can afford

Bringing on your first employee can cost more than their salaries. You may have to pay compensations, payroll taxes, insurance premiums and related expenses or benefits. Therefore, decide how much you can legally offer an applicant before you start the hiring process.

Also, consider whether you need a temporary or permanent new hire. Typically, they can be full-time, part-time or a contract employee. While a contractor can manage projects temporarily with little operating expenses, permanent employees often have more commitment to your company’s goals and missions.

Take care of your legal obligations and requirements

The legal aspects of hiring a new employee involve filling out forms and complying with Canadian regulations. Here are some steps to follow when hiring an employee in Canada:

• Get familiar with local labour laws. Review minimum wage regulations and age restrictions for employees. There are regulations on work hours, fair treatment, rest and breaks that you are expected to follow as an employer.
• Register as an employer with the Canada Revenue Agency. You must have a Payroll Deductions account and a business number (BN) if you pay salaries or related taxable benefits. You can request a Payroll Deductions account while registering for a business number.
• Set up and implement a payroll system. You must identify and correctly classify your first employee and understand the different types of pay before you start the hiring process.
• Verify that your employee is eligible to work in Canada. Your ideal employee should also have all supporting documents that convince you to hire them legally. As an employer, you must ask for the Social Insurance Number (SIN) that shows they can receive government benefits.

Prepare for your first hire

Follow these steps when preparing for your first hire:

• Determine the right salary to set. Start by calculating the labour cost of hiring your first employee. Then, research the average salary for different roles and use the information to set fair compensation.
• Create an employee benefits package. Consider starting a package that allows your new employee to get health insurance, profit-sharing, retirement plans and other related benefits.
• Start a filing system. As an employer, you are expected to establish a filing system for all your employees for the duration of their employment. You can collect employee records such as performance evaluations, timesheets and forms relating to running payroll.
• Create a handbook. Before you hire your first employee in Canada, you must have regulations and procedures that a new hire must follow. An employee handbook can include attendance roles, acceptable dress code, health and safety policies, paid time off and employee code of conduct.

2. Attract the best candidates

Next, get the right applicants to apply for the role your business needs. Start by figuring out who you need and then create a job description to match your ideal applicant.

Imagine the ideal candidate for your business

The qualities of your ideal candidate can help you write a compelling job description that attracts the right applicants. Follow these steps to help you attract your ideal candidate:

• Identify performance behaviours. These are behaviours you can use to evaluate the quality of your new hire. Find out how you’ll know someone is doing a poor, satisfactory or excellent job.
• Define essential competencies. Sort these competencies on how critical they are to your business needs.
• Set target performance levels. The target level refers to the behaviour that your ideal candidate can sustain over time.
• Define the required experience and education. Every role has some requirements. Finding out which ones are relevant to your job description can help you spot your ideal candidate. If an applicant doesn’t have the experience, you can hire based on their soft skills and train them.

Write a standout job description

For startups and small businesses, nailing your job posting can help you compete with bigger companies. Therefore, follow the best practices for meaningful and compelling job descriptions.

Begin with a summary of the role and describe what it entails clearly. To get applicants who want to work at startups and small businesses, explain that the role is for your business’s first employee. Here are elements to include in the job description for your role:

• Job title
• Company overview
• Job duties and responsibilities
• Job skills and qualifications
• Job experience
• Job education and certifications
• Working conditions (e.g. Travel requirements, physical demands and environment)
• Pay range (optional)
• Employee benefits and rewards

You may post sponsored jobs to access more qualified candidates. Alternatively, you can use social media networks to find your ideal applicant.

3. Identify your ideal candidates

After attracting various candidates to your job posting, start screening each applicant to decide who to pick as your first employee.

Review resumes, application forms and cover letters

Start by reading the resumes and using them to reduce the number of applications. Filter out candidates who don’t match the role. You can group them into ‘yes,’ ‘maybe’ or ‘no’ piles and send rejection emails to applicants whose resumes fall in the ‘no’ pile. To decide which resume to add to your ‘yes’ or ‘maybe’ pile, consider the following:

• Attention to detail
• Relevant skills and experience for your role
• Career progression in their job title
• Quantitative evidence of past achievements
• Duration at previous roles

Once you review the resumes, contact the top candidates and shortlist them for the next phase of the hiring process. Cover letters can give you more information about the applicant’s confidence, personality, self-awareness and excitement to join your small business or startup.

You can conduct a phone interview to discuss the role and make successful candidates understand your needs beyond the job description.

Screen your candidates

Some applicants may understand the role and have an excellent resume, but cannot handle your business needs. Therefore, you can conduct a pre-employment test. The examinations you can set for your first employee may include:

• Integrity test
• Skill test
• Physical strength test
• Personality test
• Emotional intelligence test
• Job knowledge test
• Cognitive ability test

As an employer, consider these three factors when deciding on a test for your first employee:

• Compliance: The test method you choose must follow regulations that protect against discrimination. You can review the material to ensure employees see the test in the right way.
• Reliability: The test method must be an accurate method to evaluate the candidates. Employees should not get different results for the same answer.
• Validity: Make sure other businesses accredit the test method you want to use to evaluate the candidates before hiring your first employee in Canada.

Invite candidates who pass your pre-employment screening to an interview.

Interview top applicants

During the interview phase, ask questions to confirm if the applicant’s vision is similar to yours. Typically, you may ask applicants the same questions to compare their answers and find the top candidate for the role. Also, find out how each applicant handles difficult situations and their enthusiasm for the role. Avoid topics like marital status, age and race. Instead, ask appropriate questions like:

• Tell me about yourself
• What are your weaknesses and strengths?
• Why do you want to take up this role in this business or startup?
• Explain your ideal work environment
• Tell me something about you that is not on your resume
• Describe a difficult situation in your career and how you overcame it
• What are your long-term career goals?
• What professional achievements are you proud of?

You can also ask questions related to the role and industry you’re hiring your first employee for. While it’s best practice to listen during interviews. You can also write things down. Note-taking helps you remember the responses of each candidate before you make your final decision.

During the interview, you can ask how much an employee would like to earn to confirm whether their salary expectations match the pay range you set.

Before you end the interview phase, give candidates the chance to ask their questions. They can use these questions to figure out if the position is right for them, and you can evaluate whether the candidate wants to work with you. Close the interview by describing the next steps and when your ideal candidate can expect to hear from you.

Check each candidate’s reference

Once you’re done with interviewing applicants, ask for three references or more from your promising candidates and reach out to them. Contacting references gives you more insights into your applicants and whether they have been honest about their qualifications, experience and skill set.

You can ask the references of top candidates any of the following questions:

• Can you tell me what working with the candidate is like?
• Can you confirm the candidate’s details like start and end date, responsibilities and job title?
• Do you know why they left their previous position?
• What are the candidate’s professional strengths and weaknesses?
• What is unique about this candidate, and why should I hire them?

Choose your first employee

Deciding on your first employee can be challenging, especially if you have several candidates that fit your ideal applicant’s attributes. Here’s what you need to do before choosing your new hire:

• Reflect on the response each candidate gave in their interviews and resumes.
• Reflect on the candidates’ personality, skills and resumes.
• Consider how promising candidates can help your business grow.

4. Bring the top applicant onboard

Once you have decided on the candidate you want to hire, it’s time to give them the job and welcome them to your startup or small business. Here are the steps you need to follow when finalizing the hiring process:

Send an offer of employment

Before you send a letter to your top candidate, email them and set up a time for a phone discussion. You can show your excitement about having them as your first employee and tell them about the terms of employment. If the applicant accepts your verbal offer, start writing an official employment letter for them.

While some you may send out physical letters, creating emails and sending documents to your top candidates is also acceptable. Your official offer letter must contain the following elements and everything you discussed in your verbal interview:

• Job title
• Start date and the deadline for accepting or rejecting the offer
• Benefits
• Compensation
• Contingencies
• At-will statement

You can also give the employment letter to a legal professional to review before sending it to your top applicant.

Notify rejected applicants

Once your preferred candidate accepts to be your first employee, it’s time to tell the remaining applicants who want the role that you have offered it someone else. You may send rejection letters through email. However, you can also call them on the phone and tell them about your decision to hire someone else.

Be honest and supportive when explaining the reason you rejected their application to your company. You can also offer constructive feedback on their resume, test, interview and other application phases. Close the rejection email or phone call by wishing them luck in their search.

Welcome your new employee

An excellent onboarding experience can help your employee succeed in their new role. It can also give them what they need to make an impact and improve your business. Therefore, consider planning their duties and responsibilities for the first month. Also, give them an employee handbook and ensure they understand everything it contains. Setting clear expectations and goals can help you measure their success in your business.

Have your new hire completes the required forms. The TD1 form is a document that determines how much tax the government can deduct from your employee’s income. When hiring an employee in Ontario or other provinces, employees may also have to fill out the TD1 form of their province or territory of employment.

5. Track your results

Once you’re done with the onboarding phase, measure your hiring process success and ensure your investments is worthwhile. Create performance reports if you used different tools or platforms for your job posting.

Measuring your success can help you get more results for your future job postings and improve the process for your next hire.

Hiring your first employee FAQs

How much does it cost to hire your first employee?

The average cost of hiring a new employee is nearly $4,700, and it takes 42 days on average to fill a role. It includes the cost for recruiting, benefits, training and other related expenses.

What should I look for when hiring an employee?

Look for a candidate’s flexibility, resilience and versatility. An applicant’s cultural fit, competitive drive, passion and sense of accountability are key. Also, consider the applicant’s experience, skills and qualifications. Some applicants don’t have the experience to take up a role but possess the personality traits and skills your business needs. When looking for your first employee in Canada, consider these applicants, unless the role specifically requires industry experience.

How do you hire employees effectively?

Follow these steps to hire the right employee effectively:

1. Define the role before starting the hiring process
2. Plan your recruiting strategy
3. Use checklists when hiring employees
4. Review the application and credentials of a candidate carefully
5. Pre-screen applicants for the role
6. Interview the candidate and ask the right questions
7. Contact references and check backgrounds
8. Send an employment offer to your top candidate