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, you could 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

Guidance on hiring your first employee

1. Getting ready for the hiring process

Before hiring your first employee, there are some preparations to consider, like your budget and creating an employee handbook. Here are some steps you could take:

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

Bringing on your first employee could cost more than their salary. You may have to payroll taxes, insurance premiums and related expenses or benefits. Therefore, it’s best that you figure out how much you can offer an applicant before you start the hiring process.

Also, consider whether you need a temporary or permanent new hire. Typically, they could 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.

Examining your legal obligations and requirements

The legal aspects of hiring a new employee include completing forms and complying with Canadian regulations. Here are some of the steps you may take if you’re hiring someone in Canada:

• Familiarizing yourself with local labour laws: Review minimum wage requirements for your region and age restrictions for employees. There are regulations on the work hours, rest times, breaks, and fair treatment that you are expected to follow as an employer.
• Registering 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 may request a payroll deductions account while registering for a business number.
• Setting up and implementing 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.
• Verifying that your employee is eligible to work in Canada: As an employer, you must ask for the Social Insurance Number (SIN) that shows they can receive government benefits.

Preparing for your first hire

These are some starting points you could follow to prepare for your first hire:

• Determine the right salary to set: You could start by calculating the labour cost of hiring your first employee. Then, you could research the average salary for different roles and use the information to set fair compensation.
• Create an employee benefits package: You may consider compiling a package that allows your new employee to get health insurance, profit-sharing, retirement plans, or 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 might 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 could create a handbook detailing the procedures that a new hire must follow. An employee handbook may include attendance roles, acceptable dress code, health and safety policies, paid time off information, and an employee code of conduct.

2. Attracting quality candidates

The next step would be to try and get the right applicants to apply for the role your business needs. You could start by figuring out who you need and then creating a job description to match your ideal applicant.

Imagining the ideal candidate for your business

The qualities of your ideal candidate could help you write a compelling job description that attracts the type of applicant you’re looking for. Here are some steps you could take to help you attract your ideal candidate:

• Identifying performance behaviours: These are behaviours you could use to evaluate the quality of your new hire. Figure out how you’ll know someone is doing a poor, satisfactory, or excellent job.
• Defining essential competencies: You could sort these competencies based on how critical they are to your business needs.
• Setting target performance levels: The target level refers to the behaviour that your ideal candidate can sustain over time.
• Defining any required experience and education: You could research which requirements are relevant to your job description to help you spot your ideal candidate. If an applicant doesn’t have the experience, you could still potentially hire them based on their soft skills and provide them with training.

Writing a standout job description

For startups and small businesses, nailing your job posting could potentially help you compete with bigger companies. You could start with a summary of the role and clearly describe what it entails. To get applicants who want to work at startups and small businesses, you could explain that the role is for your business’s first employee. Here are some elements you might 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 could use social media networks to find your applicants.

3. Identifying your ideal candidates

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

Reviewing resumes, application forms and, cover letters

You could start by reading candidates’ resumes and filtering out candidates who don’t match the role. You could 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, you may 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, you could contact the top candidates and shortlist them for the next phase of the hiring process. Cover letters may give you more information about the applicant’s confidence, personality, self-awareness, and excitement about joining your small business or startup.

You could also conduct a phone interview to discuss the role and further explain what you’re looking for in a successful candidate.

Screening your candidates

Some applicants may understand the role and have an excellent resume but not be able to handle your business needs. To assess this, you could conduct a pre-employment test. The examinations you set for your first employee may include the following, depending on the role:

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

You may also 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, i.e. the Canadian Human Rights Act.
• Reliability: You could check that you’re using an accurate test method to evaluate candidates by verifying that you do not get different results for the same answer.
• Validity: You could check whether other businesses accredit the test method you want to use to evaluate the candidates before hiring your first employee.

You could then move on and invite the candidates who pass your pre-employment screening to an interview.

Interviewing your chosen applicants

During the interview phase, you might ask questions to confirm whether the applicant’s vision is similar to yours. Typically, you may ask applicants the same questions to compare their answers and find the candidate you think would suit the role. You could also try to find out how each applicant handles difficult situations and how enthusiastic they are about the role. Here are some examples of questions you could ask:

• 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 could also ask questions related to the role and industry you’re hiring your first employee for. While you may be making sure you’re listening to candidates attentively during interviews, you could also write things down. Note-taking could help you remember each candidate’s responses before you make your final decision.

During the interview, you could also 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, you may give candidates the chance to ask their questions. They could use these questions to figure out whether the position is right for them, and you could evaluate whether the candidate wants to work with you. You may then close the interview by describing the next steps and when your chosen candidate may expect to hear from you.

Checking each candidate’s reference

Once you’ve finished interviewing applicants, you could ask for two references or more from your promising candidates and reach out to them. Contacting references may give you more insights into your applicants and whether they have been honest about their qualifications, experience, and skill sets.

You could ask the references of top candidates some of the following questions:

• Can you tell me what working with the candidate is like?
• Can you confirm the candidate’s details, like their employment start and end dates, 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?

Choosing your first employee

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

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

4. Bringing your chosen applicant on board

Once you’ve decided which 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 could follow when finalizing the hiring process:

Sending an offer of employment

Before you send a letter to your chosen candidate, you could email them to set up a time for a phone discussion. You could 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, you could then write an official employment letter for them.

While you may choose to send out physical letters, creating emails and sending documents to your chosen candidate may also be acceptable. Your official offer letter could contain the following elements, along with 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 could also give the employment letter to a legal professional for review before sending it to your chosen applicant.

Notifying rejected applicants

Once your preferred candidate accepts to be your first employee, you could also tell the remaining applicants who want the role that you have offered it to someone else. You may send rejection letters through email. However, you could also call them and inform them of your decision to hire someone else.

You may also offer constructive feedback on their resume, test, interview, and other application phases. You could then close the rejection email or phone call by wishing them luck in their search.

Welcoming your new employee

An excellent onboarding experience could help your employee do well in their new role. It may also give them what they need to make an impact and improve your business. You might consider planning their duties and responsibilities for the first month. Also, you could give them an employee handbook and check that they understand everything it contains. Setting clear expectations and goals could be helpful in measuring 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. Tracking your results

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

Measuring your success could 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 could it cost to hire my first employee?

The average cost of hiring a new employee is nearly US$4,700, and it takes 44 days on average to fill a role. This includes the cost for recruiting, benefits, training, and other related expenses.

What could I look for when hiring an employee?

You could look for a candidate’s flexibility, resilience, and versatility. An applicant’s cultural fit, competitive drive, passion, and sense of accountability are also useful to watch out for. Also, you could consider the applicant’s experience, skills, and qualifications. Some applicants may not have the experience to take up a role but possess the personality traits and skills your business needs. You may wish to consider these applicants when looking for your first employee in Canada, unless the role specifically requires industry experience.

How could I hire employees effectively?

You could potentially make your hiring more effective by taking some of the following actions:

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 chosen candidate