Hiring Your First Employee: What You Need to Know

Hiring your first employee is a major milestone for any new business owner in Canada. It can be an exciting step that brings new skills, fresh perspectives, and the extra capacity needed to help your business grow, but it can also feel overwhelming if you haven’t managed hiring before. Before taking the leap, it’s important to carefully consider whether it’s the right time. Start by defining the potential role. Make a list of daily and weekly tasks, upcoming projects that require specialized skills, and any additional work that could be handled if your regular duties are complete. If these tasks add up to at least 20 hours per week and include multiple projects that would benefit from extra support, it may be time to bring someone on board. This kind of planning ensures that your first hire has enough meaningful work and can contribute effectively to your business from the start.

Once you’ve identified the role, it’s essential to prepare for the financial and legal responsibilities that come with hiring in Canada. Employing someone involves more than just paying a salary. Employers must also cover payroll deductions, including Canada Pension Plan (CPP) contributions, Employment Insurance (EI) premiums, and any applicable provincial taxes such as the Employer Health Tax or Workplace Safety Insurance. Additional costs may include workspace, equipment, and benefits like health coverage or professional development opportunities. You’ll need to determine whether a full-time, part-time, or contract employee is the best fit for your business. Independent contractors can be cost-effective for specific projects with lower overhead, but a permanent employee offers loyalty, consistency, and a long-term commitment to your company’s vision. From a legal perspective, you’ll need to register for a Business Number (BN) with a payroll account through the Canada Revenue Agency, collect the employee’s Social Insurance Number (SIN), have them complete a TD1 form to determine tax deductions, and set up a payroll system to manage ongoing payments and deductions. These steps ensure compliance with Canadian employment laws and provide a strong foundation for your business relationship with your first hire.

Attracting the right candidate requires careful thought and preparation. Begin by defining the qualities, skills, and mindset you want in your ideal employee. Many successful first hires in small businesses are self-starters with a growth-oriented mindset, adaptable to changing circumstances, and motivated to help the company succeed. Use these qualities as a guide to craft a compelling job description. Include a clear job title, an overview of your company, a detailed list of responsibilities, the skills and qualifications required, and any benefits or perks. Emphasize that this is a unique opportunity to join a small business as the first employee, helping shape its culture and future. A well-written posting can make a big difference in attracting candidates who are genuinely excited about contributing to a growing business.

Once applications start coming in, it’s important to carefully screen candidates. Review resumes and cover letters to identify those who meet your basic requirements, then conduct brief phone interviews to clarify qualifications and gauge interest. During formal interviews, focus not only on technical abilities but also on cultural fit, adaptability, and alignment with your business vision. Look for qualities such as flexibility, resilience, passion, accountability, and versatility, which are essential in a first employee who will often play a pivotal role in shaping the company’s future. Checking references is another critical step, as it can provide insight into an applicant’s work ethic, reliability, and collaborative skills beyond what a resume or interview might reveal.

After selecting your ideal candidate, send a formal offer letter outlining the terms of employment, including job title, start date, salary, benefits, and any other important details. Onboarding your new hire properly is equally important. Introduce them to company policies, workflows, and culture, and provide clear expectations and goals for their first weeks and months. Consider creating an employee handbook and planning a structured first month, which can help your new hire feel confident, supported, and empowered to start contributing immediately.

Finally, remember that the first employee often becomes the backbone of your business. Their mindset, motivation, and engagement can significantly influence the growth and culture of your company. By investing in their development through training, mentorship, and support, you foster loyalty and dedication. Essentially, the effort and care you put into your first hire will be reflected in their performance and in the long-term success of your business. Hiring the right person is more than filling a role, it is about building a strong foundation for your company’s future.

Resources for Canadian Business Owners:

• Government of Canada – Hiring Employees

• Business Development Bank of Canada – Starting a Business

• QuickBooks Canada – How to Hire Your First Employee