How to hire your first employee as a small business

Hiring your first employee is a big milestone for any entrepreneur. It means your how to hire employees for small business research is about to pay off—you’re officially moving from solo act to small business employer. Exciting? Absolutely. Slightly nerve-racking? You bet.

Whether you’re running a bakery that’s now booked out weeks in advance or a digital agency with more client projects than hours in the day, hiring isn’t just about getting help—it’s about investing in your business’s growth.

Here’s your step-by-step SME hiring guide to get it right the first time.

When is the right time to hire your first employee?

There’s no magic formula, but here are some signs you might be ready:

• You’re turning down work because you can’t keep up.
• Your evenings and weekends have become an unofficial second shift.
• Quality is slipping because you’re juggling too much.
• You’re spending more time on admin than on tasks that generate revenue.

If this sounds familiar, it might be time to dive into the hiring process for small business and make your first official hire.

Steps to hiring your first employee

Define the role and job description clearly

Be specific about the skills and tasks you need covered. Avoid vague terms like “help with everything.” Instead, outline:

• Key responsibilities.
• Required skills and experience.
• Whether it’s full-time, part-time, or contract work.

Look at an employment contract template for inspiration—it will help you define the role from day one.

Understand legal and tax obligations

Before you start hiring, get familiar with your hiring legal requirements. These include:

• Right-to-work checks.
• Minimum wage and working hour laws.
• Health and safety rules, even for home offices.
• Tax registration and reporting.

This step ensures you stay compliant and avoid fines later on.

Register as an employer (local requirements)

In most countries, you’ll need to register with the local tax authority before paying wages. This process—called employer registration—allows you to:

• Deduct taxes from salaries.
• Contribute to social security or pensions.
• Keep accurate records for auditing.

Many governments offer quick online registration to simplify things.

Set up payroll and employment contracts

Sorting payroll setup for small business early is essential. You’ll need:

• A payroll system to handle wages, deductions, and payslips.
• A written employment contract that outlines pay, hours, leave, and notice periods.

You can start with templates, but have a legal professional review them before sending to candidates.

Post job listings and start recruiting

Use the best hiring platforms for your role and budget:

• LinkedIn – Professional roles and networking.
• Indeed – Wide reach with free posting options.
• Local job boards – Perfect for location-specific roles.

Make your listing engaging and clear—state the perks, even if it’s “great coffee and a friendly boss.”

Interview and select the right candidate

When shortlisting, focus on both skills and cultural fit. A candidate who’s 90% qualified but motivated to learn can be a better investment than someone perfect on paper but lacking enthusiasm.

Prepare structured interview questions and take notes so you can compare candidates fairly.

Make an offer and onboard your employee

Once you’ve found your ideal hire:

1. Send a formal offer letter and contract.
2. Prepare an induction plan for their first week.
3. Give them access to all necessary tools, systems, and information.

A thoughtful onboarding first employee process improves productivity and retention from day one.

Legal requirements for hiring (taxes, contracts, insurance)

When hiring your first staff member, you’ll need to:

• Handle taxes – Register as an employer and set up systems for deducting and paying income tax, social security, and other contributions.
• Provide a written contract – This is often a legal requirement and must clearly outline the terms of employment.
• Get insurance – Many countries require employer’s liability insurance to protect against workplace-related claims.

These steps form the backbone of staying compliant with employment law.

Common mistakes to avoid when hiring your first staff member

Even the most organised SMEs can stumble when hiring. Avoid these pitfalls:

• Rushing the process – Hiring the first person who applies often leads to mismatches.
• Skipping references – Past employers can reveal more than a polished CV.
• Underestimating costs – Salary is just part of the equation; factor in taxes, benefits, and training.
• Neglecting onboarding – Without proper induction, even skilled hires can struggle to perform.

Tools and platforms to help you hire efficiently

Recruiting doesn’t have to be overwhelming. These tools can save time and money:

• TransferGo Business – Pay new hires or overseas contractors quickly and affordably in 160+ countries.
• BambooHR – Simple HR software for small businesses.
• Trello or Asana – Keep your hiring process organised with visual project boards.
• Indeed and LinkedIn – Post jobs and screen candidates easily.

With a TransferGo Business Account, you can manage payroll for remote or international hires, lock in great exchange rates, and avoid steep bank fees—all while keeping your focus on growing your business.

Hiring your first employee is a leap, but with a clear plan, the right tools, and a focus on compliance, you’ll set yourself—and your new team member—up for success. And when payday rolls around? Make it seamless with TransferGo. Sign up for your free TransferGo Business Account today and take the stress out of paying your growing team.