How to Hire Employees: Our Process for Employers

Hiring employees requires defining and posting the job role, interviewing candidates, completing background checks, and completing the required paperwork. Once you select a candidate, you'll need to verify their employment eligibility and report the new hire to the state. You'll also need to set up payroll. Following a consistent process will help you manage every step. For small business hiring, making the right decisions is essential to building a great team.

 

Before you hire employees

Preparing before you hire employees helps you understand the full cost of adding someone to your team. You want to be sure that your business is ready to handle its payroll and employment responsibilities.

Start with a job description that outlines the worker's responsibilities, required qualifications, work schedule, and expected compensation. A clear description will help attract candidates who match your needs.

Next, calculate the total cost of employment. An employee's cost extends beyond their salary or hourly wages. Your budget should account for:

• Wages, overtime, and payroll taxes.
• Workers' compensation insurance.
• Employee benefits, such as health insurance or retirement contributions.
• Any training, equipment, or onboarding expenses.

You also have to determine whether the worker is an employee or an independent contractor. For employees, establish whether the position is exempt or non-exempt from overtime requirements. The US Department of Labor explains the factors used to evaluate worker classification.

Finally, obtain a federal Employer Identification Number (EIN) and register for applicable state withholding and unemployment tax accounts. 

Hiring employees as a small business owner

Hiring employees for a small business involves more than finding someone with the right experience. A consistent selection process helps you evaluate candidates fairly and complete the employment requirements. The three main steps are interviewing potential candidates, conducting appropriate background checks, and preparing the offer letter and new hire paperwork.

Step One: Interviewing Potential Candidates

Structured interviews will help you compare candidates based on their skills and experience. Asking every candidate the same core questions provides a consistent basis for evaluation. It also reduces the influence of personal impressions. Documenting interview responses also creates a useful record of your hiring decisions.

Start by reviewing applications against the job description. During interviews, use a combination of behavioral and skills-based questions. Behavioral questions explore past experiences, such as how a candidate handled a challenging customer or managed competing priorities. Skills-based questions assess specific abilities needed for the position.

Avoid questions about protected characteristics such as age, religion, disability, or national origin. The Equal Employment Opportunity Commission (EEOC) provides guidance on inappropriate interview questions.

Keep objective notes about every applicant's qualifications and responses. Using a consistent evaluation method helps you identify the candidates who are best suited to the position.

Step Two: Conduct Background Checks.

Background checks help you verify a finalist's qualifications and identify information relevant to the position. Common checks include employment history, education, professional references, and criminal history where legally permitted. Screening should be job-related and conducted consistently for comparable candidates. Background checks should be completed according to applicable federal, state, and local requirements.

When using a third-party background reporting company, the Fair Credit Reporting Act (FCRA) generally requires employers to provide a standalone written disclosure and obtain the applicant's written authorization before requesting a report. If a background report could lead to a decision not to hire someone, additional notices and procedures generally apply. 

Apply background check screening standards consistently and consider whether the findings directly relate to the job. Some jurisdictions also restrict when employers can inquire about criminal history.

Step Three: Offer Letter and New Hire Paperwork.

Once you've selected a candidate, provide them with a written offer outlining the position and employment terms. After they accept the offer, collect the required tax forms and verify their employment eligibility. You'll also need to prepare onboarding documents. Completing new hire paperwork before payroll begins helps prevent delays and administrative problems.

Your offer letter should generally identify the following items:

• Job title.
• Expected start date.
• Salary or hourly wage and pay frequency.
• Work location.
• Anticipated schedule.
• Benefits eligibility and applicable employment conditions.

Begin collecting these required forms as soon as the candidate accepts the position:

Form W-4: Employees complete this form so employers can determine federal income tax withholding. 

Form I-9: Employees must complete Section 1 no later than their first day of employment. Employers generally must complete Section 2 within three business days after the employee begins work. Short-term employment lasting fewer than three days has a different deadline.

Other documents: Depending on your state and business, you will need to collect state withholding forms, direct deposit authorization, benefits enrollment information, and employee handbook acknowledgments.

How to hire international employees: US employers may hire individuals who are authorized to work in the United States. Some international candidates already have work authorization. Others may require employer sponsorship for an appropriate work visa. Employers must verify authorization through the same Form I-9 process used for all hires, without unlawful discrimination based on citizenship status or national origin. Because sponsorship requirements can be complex, consult a qualified immigration attorney when considering candidates who may need visa sponsorship.

What to do after hiring an employee

After an employee begins work, an employer must complete the required reporting and establish accurate payroll records. These help government agencies maintain employment information and allow businesses to meet their ongoing tax and recordkeeping obligations. Addressing them promptly makes the transition from hiring to regular employment more organized.

Report the hire to the State Employment Agency

Employers generally must report newly hired employees to the appropriate state agency within 20 days of hire (some states have shorter deadlines). This requirement supports child support enforcement and helps government agencies identify improper benefit payments. Pennsylvania employers report qualifying new and rehired employees through the state's New Hire Reporting Program.

The Pennsylvania New Hire Reporting Program provides reporting instructions and submission options.

Employers usually must provide:

• Employer information: Business name, address, and federal EIN.
• Employee information: Full name, address, Social Security number, and date of hire.

Pennsylvania employers can submit their reports electronically. This makes it easier to manage new hire reporting when you're adding multiple employees.

The requirement can also apply to rehired and seasonal employees. Employers operating in multiple states should review the applicable state reporting rules. Deadlines and submission procedures may differ.

Adding someone to payroll does not automatically fulfill the new hire reporting requirement. Confirm that the report has been submitted and maintain documentation for your own records.

Processing Payroll and HR as a Small Business

Hiring an employee is just the beginning of managing your workforce. Employers must process wages accurately, withhold and remit payroll taxes, meet filing deadlines, and maintain employment records. Establishing reliable payroll and HR procedures will help your small business meet these responsibilities while creating a smoother experience for employees.

Payroll tax compliance involves several recurring responsibilities. These include:

• Withholding federal income taxes
• Calculating Social Security and Medicare contributions
• Preparing required tax filings

The IRS outlines these employment tax obligations and the importance of making timely deposits.

Accurate recordkeeping is also important. Employers should maintain wage, hour, withholding, and employment records according to requirements. Well-organized recordkeeping supports payroll accuracy and will help your business respond to audits or employee questions.

For small business owners who already manage day-to-day operations, these responsibilities can become more time-consuming as the team grows.

Exact Payroll can help you manage payroll processing, tax filing, direct deposit, onboarding, and HR-related compliance requirements. Our small business payroll services can help streamline your operations, so you can focus on what you do best.

Having a consistent new hire process makes it easier to add new workers and maintain accurate records. Direct deposit services offer a convenient payment option for you and your employees. Organized onboarding helps ensure that essential employee information is collected.

Exact Payroll's payroll and HR solutions for employers in Pennsylvania provide support for managing these ongoing responsibilities. Ready to hire with confidence? Talk with an Exact Payroll specialist about simplifying payroll and HR for your growing team. Contact us today.