If you’re at the point where you’re considering hiring an employee or contractor, you’re doing something right - your business is at a point where there’s enough work to share. This is a huge milestone for entrepreneurs, but it shouldn’t be taken lightly. Hiring employees can be costly and it comes with lots of strings attached. Before you jump in head first, here are 7 things you need to know when you want to hire for your small business.

Make Sure It’s the Right Decision

Those with experience will tell you that it is much easier to hire someone than it is to fire them. So make sure you really do want (and need) an employee or contractor. Outline the work you want them to do and evaluate how much time it will take. Consider if the work will be ongoing or if it is just temporary. Also consider whether or not the work requires specialized skills, and if so, how specialized should they be. It is also very time consuming to take on a new employee or contractor, so make sure to factor in the time it will take for you to manage and train them, especially in the beginning.

Independent Contractor Vs. Employee

You have two main paths you can take when you decide to expand your team - an employee or an independent contractor. Each have benefits and drawbacks and you may find yourself utilizing both at different times or for different purposes. The biggest difference is that independent contractors work for themselves and employees work for you. Employees, while usually cheaper on an hourly basis, do have other costs attached to them - benefits, healthcare, workers compensation, etc. You also take on certain liabilities when you hire an employee and are required to maintain specific records pertaining to their employment. This applies to companies operating out of the U.S. as well as Canada. Because there are tax benefits to being and hiring an independent contractor, the U.S. and Canada each have specific guidelines for what constitutes contractor status. If you attempt to claim contractor status, but actually treat the contractor like an employee, you are at risk of being audited and ultimately fined.

Your Budget

No matter what path you choose - employee or contractor - you will have very specific costs you are responsible for. Make sure that you can cover these costs before proceeding because you will be legally obligated to pay wages owed to your employees or contractors. An evaluation of your budget may also weigh into the decision to pick a contractor or employee.

The Candidate Profile

Once you have a clear idea of what work you need to be done, you need to create a clear candidate profile. This should include not only the skills necessary to be successful, but also personality characteristics or requirements of the job that affect your candidate’s lifestyle. Work ethic, workplace expectations, the ability to work well with others, and the ability to handle stress may all be important qualities that fall outside of trained skill sets but are just as important for success. Once complete, your job post should be included on your website as well as popular job boards like CareerBuilder and Indeed.

Test the Candidate

Once you have applicants for your position, you can narrow the field before entering the interview phase by testing them. You will want to cater the test to what tasks they will be completing for you, but don’t forget you can also give them tests that assess their personality fit for the position. If you do not feel comfortable creating your own assessment, you can find tests online or use resources like Smart Recruiter’s assessment tool.

Prepare the Interview

After you have narrowed the pool, you are ready to interview your candidates. Before going into this, make sure you have prepared a list of specific questions or use an online tool that can help generate questions for you. Also, if you already have other employees, consider having them join you for the interview. The more perspectives you can get, the better.

Prepare for the Employee or Contractor

Once you’ve finally made your choice, you’re almost there - but don’t get too comfortable because there is still a lot of work involved in bringing on a new employee or contractor. If you’ve opted for a full-time employee there will be lots of U.S. paperwork or Canadian paperwork to complete and resources that need to be ready for them. If you’ve opted for a contractor, you will have less work on your plate, but will want to make sure you have very clear expectations because you will have less control over their work.

The decision to expand your team is a very important one, especially if it is your first hire, so make sure to take it seriously. Put thought into whether you want a contractor or employee and take your time through the recruitment process. Picking the right person can have a direct impact on your bottom line, so do all you can to find the perfect fit. Once you have found that employee or contractor, you can sit back and watch your business grow just as you always hoped.