How to hire employees: A step-by-step guide

Hiring is top of mind for many small businesses. According to QuickBooks Small Business Insights, 47% of U.S. small businesses surveyed plan to expand their workforce over the next three months.

But hiring a great candidate is only part of the process. You also take on new legal, payroll, and onboarding responsibilities. Fortunately, each step becomes much more manageable when you follow a clear process.

Use this step-by-step guide to learn how to hire employees with more confidence, from preparing your business to welcoming your new team member.

How to hire employees in 9 steps

Here's a quick overview of the hiring process. Use this chart to see each step and why it matters.

Step 1: Make sure you're legally ready to hire

Before you bring on an employee, take time to understand the federal, state, and local requirements that may apply to your business. Keep in mind that requirements can vary by state, business type, and employee classification. You may want to consult a qualified tax, legal, or HR professional.

Some common pre-hiring steps include:

• Get an employer identification number (EIN): You'll use this IRS-issued number to report and file payroll-related taxes. You can apply for an EIN online.
• Register with your state tax or revenue agency: Many states issue an account number for employer taxes.
• Register with your state labor department, if required: This usually ties into unemployment insurance and new hire reporting.
• Understand workers' compensation requirements: Most states require workers' compensation insurance, though rules vary.
• Prepare new hire forms: Employees complete Form W-4 for tax withholding and Form I-9 to verify work eligibility.
• Review workplace poster requirements: Some federal and state labor law posters may be required.
• Confirm any state or local hiring rules: Requirements can differ by location.
• Review basic labor law requirements: This includes federal and state minimum wage, overtime rules, and anti-discrimination laws, so you can classify and pay employees correctly.

Step 2: Define the role and responsibilities

Before you post a job, clarify what your business actually needs. A well-defined role attracts better-fit candidates and sets everyone up for success.

Start by answering these questions:

• What problem should this role solve?
• Should the role be full-time, part-time, seasonal, or temporary?
• What tasks will this person own?
• What skills or experience are required?
• Who will this person report to?
• What schedule and work location does the role require?
• What should success look like in the first 30, 60, and 90 days?

This is also a good time to decide whether you need an employee or a contractor. The distinction affects taxes, paperwork, and how you manage the work.

Step 3: Write a clear job description

A strong job description helps candidates understand the role and helps you attract the right applicants.

Be sure to Include:

• Job title
• Role summary
• Key responsibilities
• Required and preferred qualifications
• Pay range, where applicable
• Employee benefits and perks
• Work schedule and location
• Application instructions

Keep the language clear and direct. Avoid vague jargon like “wear many hats” or “rock star.” Instead, explain what the person will do, who they’ll work with, and how their work supports the business.

Step 4: Find qualified candidates

Once your job description is ready, choose the hiring channels that make sense for the role. Some roles may do well on large job boards, while others may need a more targeted approach.

Places to find candidates include:

• Job boards and career sites
• Employee referrals
• LinkedIn and professional networks
• Local schools, trade programs, or community groups
• Industry associations
• Social media or local hiring pages
• Existing customers or community connections, when relevant

Use more than one channel when possible. A broader search can help you reach active job seekers who may not be looking every day but are open to the right opportunity.

Step 5: Interview qualified applicants

A structured interview process helps you evaluate candidates more consistently. Prepare questions before the interview and ask each candidate the same core questions.

During the interview, you can:

• Ask about relevant experience
• Discuss role-specific skills
• Use a skills assessment or work sample, when helpful
• Ask about pay expectations and availability
• Leave time for candidate questions
• Document feedback after each interview

Not sure what to ask? Here are a few sample questions to get you started:

• What experience best prepares you for this role?
• What would you focus on in your first 30 days?
• How have you solved a similar problem in a past role?
• What tools, systems, or processes have you used before?
• What kind of work environment helps you do your best work?

Avoid questions that could create legal risk, such as questions about age, family status, disability, religion, or other protected characteristics. Review federal, state, and local anti-discrimination rules if you’re unsure whether a question is appropriate.

Step 6: Choose your candidate

After interviews, compare each candidate against the role criteria. Try not to rely only on gut feel. Use the job description, interview notes, work samples, and references to help you make a confident choice.

Before choosing a candidate, you may want to:

• Review qualifications, experience, and interview feedback
• Check references when appropriate
• Consider culture add, communication style, and growth potential
• Conduct background checks when relevant and legally compliant
• Document the hiring decision

If you use a third-party background check provider, you may also need to follow Fair Credit Reporting Act (FCRA) requirements.

7. Make a job offer

A job offer should be clear, specific, and easy for the candidate to review. It should also give the candidate a deadline to respond so you can keep the hiring process moving.

A job offer may include:

• Job title
• Pay rate or salary
• Pay schedule
• Start date
• Work schedule and location
• Employee health benefits eligibility
• Reporting manager
• Contingencies, if applicable
• Deadline to accept the offer

You can share the offer by phone first, then follow up in writing. This gives the candidate a chance to ask questions and gives both sides a clear record of the offer details.

8. Report the new hire and set up payroll

Once your candidate accepts, you'll have a few important steps to complete before their first payday, so you can pay them accurately and on time.

Here's what to do:

• Report the new hire to your state’s designated new hire reporting agency within the required deadline (often within 20 days or sooner, depending on the state).
• Collect tax withholding information
• Complete employment eligibility documentation
• Set up direct deposit, if offered
• Add the employee to payroll
• Set up your pay schedule and tax withholding
• Add benefits deductions, if applicable
• Track time for hourly employees

The right tools can simplify this process. Payroll software helps you calculate, file, and pay payroll taxes, set up direct deposit, and add employees quickly. For hourly team members, time tracking software syncs hours directly with payroll, so you save time and reduce manual errors.

Step 9: Onboard the employee

Onboarding helps your new hire feel welcomed, prepared, and clear on what's expected. A thoughtful start sets the tone for a long, productive relationship.

A strong employee onboarding plan may include:

• Preparing equipment, tools, software, and logins
• Sharing the employee handbook and policies
• Introducing the team
• Reviewing the company's mission, values, and communication norms
• Providing role-specific training
• Setting first-week priorities
• Creating 30/60/90-day goals
• Scheduling regular check-ins

The first few weeks can shape how confident and prepared a new employee feels. Set clear goals, offer early feedback, and schedule regular check-ins to help them get up to speed.

New hire checklist for employers

Want a quick reference? Use this new hire checklist to stay organized from offer to first day.

• Confirm role, pay, schedule, and classification
• Prepare job description
• Choose hiring channels
• Interview and evaluate candidates
• Send offer letter
• Collect required forms
• Report the new hire to the state
• Set up payroll and direct deposit
• Add benefits deductions, if applicable
• Prepare equipment and system access
• Review policies and expectations
• Set onboarding goals and check-ins

When should you hire employees?

Timing matters. Hiring too early can strain your cash flow, but waiting too long can slow growth or burn out your team. Watch for consistent signs that your business needs more capacity or new skills.

It may be time to hire if you notice:

• Consistent overtime or overwork
• Declining customer service or slower response times
• Missed deadlines or delayed projects
• Owner burnout
• Skills gaps your current team can't fill
• Turning down work because the team is at capacity
• High employee turnover is tied to workload

If these signs point to a year-round trend rather than a seasonal peak, a permanent hire may be the right move.

Tips for hiring remote employees

Hiring remote team members calls for extra clarity around communication, schedules, and tools. A few simple practices can help you find the right fit.

Use video interviews when helpful

Video interviews via Zoom, Google Meet, or Microsoft Teams can help you get a better sense of how candidates communicate in a remote setting. They also give candidates a chance to ask questions and understand how your team works day to day.

Test for self-direction and communication skills

Remote employees need to manage their time without in-person supervision. As you evaluate candidates, look for signs they can stay organized, follow through, and work independently.

Confirm time zone and schedule expectations

Before you move forward, make sure you’re aligned on working hours, availability, and response-time expectations. This can help avoid confusion if your team works across different time zones.

Use skills assessments or work samples

A short skills assessment or work sample can help you see how a candidate approaches real tasks. For example, you might test software skills, writing ability, customer service judgment, or technical skills like coding. Keep the assignment relevant to the role and respectful of the candidate’s time.

Prepare remote onboarding materials

Remote employees need easy access to the information they would normally get in person. Prepare training documents, policies, tool instructions, and first-week priorities before their start date.

Provide equipment and access before day one

Make sure the employee has the tools, logins, and equipment they need before they start. This helps them begin training on time and avoids first-day delays.

Common hiring mistakes to avoid

You may run into some challenges during the hiring process. Steer clear of these common missteps.

Writing a vague job description

An unclear job description can attract the wrong candidates or create mismatched expectations. Be specific about the role, pay range when applicable, work location, schedule, responsibilities, and application instructions.

Skipping salary research

Pay that’s too low may make it harder to attract qualified candidates, while pay that’s too high may strain your budget. Research similar roles in your industry and location so you can set a realistic compensation range.

Asking inconsistent interview questions

If every candidate gets a different interview, it can be harder to compare them fairly. Prepare a consistent set of core questions, then add role-specific follow-ups as needed.

Moving too slowly with strong candidates

Qualified candidates may be interviewing with multiple employers. Keep the process moving by communicating next steps, setting clear timelines, and following up quickly after interviews.

Forgetting required new hire paperwork

New hires usually need to complete tax, payroll, employment eligibility, and company-specific forms before or shortly after they start. Prepare those documents ahead of time to help you avoid onboarding delays.

Treating onboarding as a one-day task

Onboarding should go beyond first-day paperwork. Clear goals, training, regular check-ins, and early feedback can help new employees feel supported as they settle into the role.

How QuickBooks can help when hiring employees

Hiring doesn't end when a candidate accepts your offer. You also need to pay employees accurately, manage tax withholding, track time, organize employee information, and support benefits.

QuickBooks Workforce can help small businesses manage payroll, tax withholding, direct deposit, time tracking, benefits deductions, and employee records. You can reduce manual work and help new hires get paid accurately and on time, right from day one.

Explore QuickBooks Workforce to see how it can help support your hiring process from offer to onboarding.