Ready for some additional help but not sure how to hire employees? Congrats, bringing on staff is a huge milestone for any business.
When thinking about how to hire your first employee, your fiftieth, or some seasonal help, there are a few important things to consider. You need to find the right candidates and make sure you’ve set everything up correctly (and legally).
Not to fret — we’re here to help with the basic steps of hiring an employee. (This post contains general guidance. For advice specific to your business, be sure to consult with a professional.) Here’s a checklist for how to hire employees, including what you need to do before and after hiring.
Before you hire employees
1. Make sure you have a Canadian Business Number (BN) or Employer Identification Number (EIN) if you do business in the United States.
Before hiring employees, you’ll need to get a BN from the Canada Revenue Agency (CRA). You can get a BN in three ways:
- Register online
- Complete Form RC1 and return it to your nearest tax office or centre.
Contact CRA on 1-800-959-5525.
- In Quebec, the BN doesn’t include your GST/HST accounts, this must be registered separately with Revenu Québec.
2. Open a Payroll Deductions account.
A payroll account number is given to an employer to identify themselves to the Canada Revenue Agency.
The payroll account number is made up of:
- Nine-digit BN
- A two-letter code
- A four-digit reference number
Businesses aren’t limited to just one payroll program account. So if you operate in different cities, you can have separate payroll accounts for each location.
Get Started with Square Team Management
Empower your team and protect your business.
3. Define the role you’re hiring for.
If you don’t know what you’re looking for, how do you know when you find it? Before you start the process of how to hire employees, figure out what kind of support you need. Make a list of the most important tasks you need help with. Is it someone to help with inventory management, email marketing, or bread baking?
Next, think about what responsibilities you’d like the person in this position to take on in the future. Deciding how much to pay your new employee depends on the kind of work you need done, the role’s seniority, and your budget.
Finally, think about what kind of background and skillset would best serve this role and how much experience is needed.
Once you’ve done this legwork, you’re ready to write a job description. A clear, thoughtful job description helps you hire the right person.
4. Find your candidates.
Ask your best employees if they know anyone who might be a good fit for the role. Referrals save you time because they’re already vouched for and can keep you from having to sort through a mountain of resumes.
However, because people tend to associate with others like them, relying on staff referrals can make for a less diverse workplace. This isn’t just about being politically correct. Having a more diverse workforce is better for your business. Additionally, many employees feel their companies should be more diverse.
To find highly-qualified, diverse candidates, cast a wider net. Post your job description to job sites like Indeed or LinkedIn. Include a statement at the bottom of the post that identifies your business as an Equal Opportunity Employer, saying that qualified candidates of all genders, ethnicities, races, sexual orientations etc, and those with disabilities are strongly encouraged to apply. Instagram is also a great place for job postings.
Consider blind recruitment, hiding applicants’ names — and potentially even education — and years of experience to overcome unconscious bias and promote greater workplace diversity.
5. Conduct interviews.
You should try to have at least a couple of employees interview the candidates, if possible. Each person who works at your business will approach the interview with different goals, giving you a more balanced assessment.
If you run a larger business, you might think about running interview panels where each interviewer is asked to focus on a specific area during the interview. In that situation, one person might focus on teamwork, while another looks for technical skills. The benefit of this approach is twofold — you get an assessment of a candidate’s very specific skills, and your employees feel like they are a part of the process.
Once you know who is interviewing your candidates, you need to think about what everyone is going to ask. You’ll want to go through their work history to make sure they’re qualified, but you’ll also want to ask questions that give you an idea of how they’d interact with the rest of your staff and your customers.
How do they approach problem-solving? What’s a specific example of how they’ve solved a work problem in the past? How good are they under pressure? If a client is dissatisfied or angry, how would they handle that situation?
6. Run a background check.
Once you’ve chosen a candidate for the role and made an offer, you might want to run a background check. Also known as a pre-employment screening, it’s a background check is an important step to help keep your business, employees, and customers safe. (This is how to hire employees who are who they say they are.) Applicants must always authorise your business to run a background check.
Be aware that there are complex legal requirements and restrictions on background checks, many of which vary by state. Some provinces and territories restrict the types of criminal history inquiries you can pull and when in the application process you can inquire about a criminal history, while others require that a role meet specific requirements if you are going to pull a credit history. (Some provinces ban employers from asking about criminal history on job applications altogether). To comply with all of these requirements, businesses usually use a third-party agency to conduct background checks.
There are also regulations on how you can use the information from a background check. For specific guidance or advice on background checks, consult with a legal professional.
7. Make sure they’re eligible to work in Canada.
It’s your responsibility to make sure all your employees are legally allowed to work in Canada. If you hire someone who doesn’t have the right employment eligibility, there can be penalties.
To ensure you hire the correct employees: you should check the person’s Social Insurance Number (SIN). SINs that begin with “9” is usually assigned to a person who is not a citizen of Canada or they’re not a permanent resident. It could also mean they are only authorized to work for a certain employer.
If a candidate is eligible to work in the country, but doesn’t yet have a SIN, they can apply for one at the Service Canada Office.
The employee should complete a Form TD1. This determines the amount of tax that will be deducted from the employee’s salary. Employees in In Quebec should use the federal TD1 and provincial Form TP1015.3-V.
After you hire employees
8. Obtain workers’ compensation insurance.
If you have any employees, you must register with your provincial Workers’ Compensation Board or Workers’ Compensation Board (WCB) – and pay Workers’ Compensation insurance premiums.
Workers’ compensation insurance requirements for employers vary depending on the territory. In the Northwest Territories, for example, within 10 days of commencing operation, all businesses will need to register with the WCB.
9. Go through the full onboarding process.
Find a full checklist for onboarding remote and in-person employees here, including:
- Add your employee to internal systems
- Complete new hire paperwork
- Share your employee handbook
- Provide necessary tools
- Start a shadow program
- Send a reference guide
10. Choose a payroll method.
After you hire your first employee, you need to set up a system to pay them and take care of payroll taxes. You can do payroll yourself, through an accountant, or through a payroll service.
Many people choose a payroll service to save time and avoid dealing with all the complications surrounding payroll (like taxes). Some payroll services also offer integration with your insurance provider and take care of new-hire reporting, which helps remove those headaches.
But even if you choose to use a payroll service (or outsource payroll to an accountant), it’s good to be familiar with the basics of how it works. There are three parts to payroll: paying employees, paying payroll, and filing tax forms.
Paying employees includes everything from tracking hours worked to calculating tax withholdings and sending checks. Payroll taxes and filings are tasks that usually must be
completed every month and quarter, depending on the size of your business.
If you’re hiring remote employees, here’s a quick guide on how to get started managing payroll and taxes across multiple provinces.
11. Display workplace posters.
Workplaces covered by the Occupational Health and Safety Act must display:
- a health and safety at work poster
- a copy of the Occupational Health and Safety Act
- the names and locations of your workplace joint health and safety committee members
If there are more than five regularly-employed workers, you will also need to maintain and post health and safety, workplace violence, and workplace harassment policies every year.
As with all our articles, this content contains general information and guidance only and is not a substitute for legal or tax advice. For advice specific to your area or business, be sure to consult with a qualified professional.