Are You Ready to Hire an Employee for Your Small Business?

When you are running a small business by yourself, there may come a time when you decide you need to bring in some help. After all, there's only so much of your time to go around. If you want to increase your profits and grow your business bank account balance, you may need some additional hands.

You don't want to jump into hiring a staff member, though, so be sure to ask yourself these four questions to determine if you are really ready to bring an employee on board.

1. Is your business doing well enough to cover the costs of someone else's salary?

Your company is going to have to pay any employee you bring on board. And this will mean less money going into the company's coffers -- and less profit available for you to pay yourself a salary or distributions.

You'll want to make sure your company is going to be profitable enough to cover added salary costs you're taking on. If you don't have enough business as it is, and hiring a new worker isn't likely to fix that, then you may want to wait until you have more customers before bringing a new employee on board.

2. Will bringing on a new employee allow you to scale up and earn more revenue?

Ideally, the employee you are hiring will add enough value to cover the cost of what you're paying them (including benefits). Otherwise, bringing them on board would be a net negative. So, consider exactly what an employee will add to your organization. If you'll be able to take on more clients or sell more products, adding staff may well be worth your while.

3. Do you have clearly defined goals for the worker you'll bring in?

You should also consider why you're bringing someone in and what you hope to accomplish by doing so. You need to be ready to delegate responsibility and have a clear job description -- both to ensure you hire the right person and to make certain that whomever you bring on is going to add value to your organization.

4. Are you ready to deal with the tax compliance issues associated with employing someone?

As an employer, you are required to comply with certain tax regulations. You'll need to pay a portion of your employee's Social Security and Medicare taxes, for example, and you will also need to withhold income taxes from your employee's paychecks and send in payments regularly to the IRS.

In most cases, you will need to hire a payroll service to help you take care of these obligations. That's an added expense, and some additional hassle you have to deal with, so you'll want to be sure you're ready for these obligations before you move forward with hiring.

5. Do you understand the legal requirements of having an employee?

Finally, you need to know the legal rules for employing a worker. For example, you will likely need to purchase workers' compensation insurance. You'll also need to comply with minimum wage laws, workplace safety laws, and other regulations designed to protect your new staff member's rights on the job.

Hopefully, the answers to these five questions will help you make the right choice about whether to hire. If you decide to move forward, remember to take your time so you can ensure you find a staff member who is a great fit for your small business.