Whether you’re looking to hire one employee or a team of employees, making that first hire is a big step. You might be doing this as soon as you start your business, or it could be something you choose to do after a few months or years of working alone. Regardless of why or when you are making your first hires, there are some crucial things you need to know.
Here are three major considerations that need to be thought through:
There are alternatives
Remember, there are alternatives to hiring employees for your business. Namely, you’re looking at freelancers or outsourcing. Hiring a freelancer means you have someone to take on a specific task or tasks for your company, but they aren’t an employee. So, you only pay them for their work, bypassing the additional costs that come with employment.
Outsourcing is the same, only you could outsource to agencies rather than individual freelancers. The same concept applies; you pay a fee for the work, but you get the added benefit of accessing a team full of people to do the work for you. After looking at these two options, you may realize that you don’t need to hire employees after all.
You need workers’ compensation insurance
Unless you work in Texas, you are going to need workers’ compensation insurance. What is this and how does it work? Well, let’s say you run a construction business and one of your workers gets injured because some equipment was faulty or something fell on them while they were working. They can call a construction accident lawyer and make a claim for compensation. Workers’ compensation insurance will help you pay for this claim, saving your business money.
In essence, it is a type of insurance you need to have that protects you and your employees if one of your workers gets injured or contracts an illness from their job. It is a legal requirement, and the premiums can be expensive depending on your industry. Again, you should refer back to the first point; do you really need to hire any employees?
Their wage is only a fraction of the costs of hiring employees
It’s easy to think that you pay an employee x amount each year, and that’s how much it costs to hire them. Wrong. Firstly, you factor in the cost of hiring them, which can be crazily expensive – particularly if it takes a long time to find the right candidate. When you do find the right candidate it’s important you check their credentials – it can be a good idea to use a decentralized identity that verifies their degree is what they say it was.
Then, you need to factor in all the benefits that you need to provide your employees. Workers’ comp is one, but in some states, it’s also a legal requirement to provide health insurance for employees. If you want them to stick around, you need additional benefits to keep them happy, all of which add up. So, don’t just look at the wage and think that’s how much an employee will cost.
Overall, the underlying point is that you should think twice before making your first hire. Employees are expensive, so consider if the alternatives are not better for you.