How to prepare for your first employee.

May 17 2019 | PayPal editorial staff

Hiring your first employee is a significant milestone on the road to small-business success. It also comes with a whole new set of responsibilities. Luckily, there are tools that can help you meet these challenges and set you up for success.
With your first employee comes a slew of administrative responsibilities that can be costly to ignore: employee record keeping, performance documentation, payroll deductions, cultural implications. The list goes on.

Many small business owners are surprised to learn that even adding one or two new hires can exponentially increase the amount of paperwork and responsibility from what they were used to. This can be true whether you are a team of two, three, or thirty.

Establishing a few simple HR processes now will help avoid cost, risk, and headaches down the road. And it's never too early to begin.

Step 1: Hire the smart way.
Once you post your job opening, you're likely to receive dozens, if not hundreds of applicants. But if you’re sorting through all those résumés by hand, your top candidates may be snatched away by faster, more organized competitors.

Streamline your recruitment process and dramatically reduce time-to-hire with an applicant tracking system (ATS). Though it may sound intimidating, an ATS is just a simple, digital way to accept applications, review references, set up interviews, and make informed hiring decisions. An ATS also allows you to save qualified applicants in a 'candidate pool' for your next hiring round.

ATS and recruiting software come in many shapes and sizes. Look for simple, affordable options built specifically for small business needs.

Step 2: Centralize everything.
Now that you have employees, you are obligated by law to keep certain documents and records on file. These can vary by state, but may include:
  • date of hire
  • personal information
  • tax forms
  • wage and deduction rates
  • performance documents
  • vacation or leave of absence records
  • emergency contacts
  • and more

The thing about employee records is that it doesn't take much for them to multiply. Before you know it, what once was a shoebox becomes an entire cabinet of papers, forms, certificates, and notes. Worse yet, not being able to easily access these documents can even be an employment law violation.

The answer is to step away from the banker's box and towards a simple, centralized solution. Digital employee record management allows you to keep these important documents safe, secure, and in one easy-to-access place.

A centralized employee record or HR system also allows you to personalize the types of records you want to keep and easily manage who has access to them. This way, sensitive information, such as salaries or bank information, can be limited to payroll managers and executives, whereas emergency contacts may be visible to the whole team.

Bonus: Enable your employees.
Another feature of storing employee records in a digital HR system is that it gives your employees the autonomy to update their own information. Instead of nagging employees to add their phone number or address, each team member can log into their personal employee portal and edit that information themselves.

This means less work for you and less risk of incorrect or outdated information in your system.

Step 3: Automate and sync everyday tasks.
Employee records are just one piece of the people-management puzzle. You might also need to track and approve vacation requests, calculate payroll deductions, provide regular training, and administer group benefits for your growing team. Don't get overwhelmed. Navigating these new responsibilities is necessary to grow your small business—and that's why you hired these new employees in the first place, right?

One of the easiest ways to accomplish all these new and often tedious tasks is by automatically synching your employee data whenever and wherever possible.

For example, rather than tracking vacation requests through email and then manually calculating vacation pay, time off management software can automatically track requests, calculate balances, and then store the necessary documentation in each employee's profile for future reference.

Automation can also take care of things like assigning training modules, modifying group benefits information, and generating payroll reports. And if you use a single platform to sync it all, you'll always know exactly where to find the information you need.

Save time, save money, reduce risk.
Growing your small business team is far too important to wing it. Setting up simple growth processes - like a hiring funnel, a centralized employee document system, and automated time off tracking - can save you significant time and money, all while helping to reduce the potential risk of labor law violations.

Most of all, automating your HR means you can spend more time focusing on more important things: finding the best people for your team, discovering their talents and strengths, and giving them the resources they need to help your business thrive.

Spending hours every week on paperwork is probably not the most effective use of your time. Getting organized today, can help give you a head start tomorrow.

About PayPal for small businesses.
For nearly 20 years, PayPal has been a proud partner and platform for over 19 million merchants as they launch, scale, and grow. From access to fast funding to getting paid online, learn how our payment solutions can also help your business.
The contents of this site are provided for informational purposes only. You should always obtain independent, professional accounting, financial, and legal advice before making any business decision.

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UPDATE AS OF 6/16/20:

Due to overwhelming response to the PayPal Empowerment Grants for Black Businesses Program, we paused the acceptance of new applications on Saturday, June 13 at 3 p.m. EDT. This will allow us to process submitted applications and assess availability of additional funds.

We recognize the critical challenge of access to capital that Black-owned businesses face. Please know that this grant program is part of a larger commitment from PayPal to invest in Black and minority-owned businesses and communities. Together, AEO and PayPal are determined to do more to execute on our shared vision of creating economic opportunity. We are exploring additional ways to address this urgent need.

We encourage those who were unable to complete an application by 3 p.m. EDT on Saturday to visit to join a mailing list for future updates.
I saw the announcement that the grant is closing, will there be another opportunity? 
Due to overwhelming response, we paused the acceptance of new applications on Saturday, June 13 at 3 p.m. EDT. This pause will allow us to process submitted applications and assess the availability of additional funds. 

We recognize the critical challenge of access to capital that Black-owned businesses face and are exploring additional ways to address this urgent need. 

Why isn’t PayPal doing anything for other minorities and economically challenged people of all races?
PayPal's mission and vision is that every person has the right to participate fully in the global economy, and we have an obligation to empower people to exercise this right and improve financial health. PayPal provides simple, affordable, secure and reliable financial services and digital payments that enable the hopes, dreams and ambitions of millions of people around the world. In addition to our global commitment to help everyone improve financial health, we also recognize the critical challenge of access to capital that Black-owned businesses face and we are committed to helping the Black community overcome these challenges.
My application was in progress when I received the notice. Am I still able to submit? 
Thank you for beginning your grant application. Incomplete applications expired on Tuesday, June 16 at 3 p.m. EDT and will no longer be considered.     

If you didn't complete your application by 3 p.m. EDT on June 16th, we will automatically place you on a mailing list to receive future updates on the program. 
I submitted my application prior to the notice, am I still eligible? 
Yes. If you received email confirmation that your application was submitted, you are still in the review cycle. We will start our evaluation and will follow up in the next two weeks.  
I've already submitted my application. Does this mean there will be a delay in when I receive funding? 
Thank you for your submission. We are using this time to focus on your application. We will start the review process in the next two weeks. This will not impact your reward timeline.  
When do you expect the program to reopen? How will we be notified? 
We are exploring additional resources that may be helpful to you. Please check back on the website for the most recent updates. In the meantime, these additional options may be helpful to you: 

The AEO Main Street Rise package offers AEO products to support your small business during this challenging moment. 

If your organization has been negatively impacted by COVID-19 and has not yet been approved for an SBA Paycheck Protection Program loan, PayPal is still accepting PPP loan applications. You can learn more about PPP loans at Obtaining a PPP loan will not disqualify your organization from applying for the PayPal Empowerment Grant. The lender for the Paycheck Protection Program Loan through PayPal is WebBank, Member FDIC.

On June 11, 2020, we announced our commitment of $10 million to Black-owned businesses impacted by COVID-19 or civil unrest. These grants will provide direct support to business owners to cover expenses related to stabilizing and reopening their businesses. The fund will be managed in partnership with Association for Enterprise Opportunity, a leading national nonprofit expanding economic opportunity for Black entrepreneurs through its Tapestry Project.

What information is needed and how do I apply?
If you are interested in applying for an empowerment grant, please visit to learn more and access the grant application. We are working closely with our partner the Association for Enterprise Opportunity to conduct a detailed vetting process on each of the businesses that will be awarded a grant.

Who is eligible to receive these grants?
These grants will focus on providing support to Black small business owners to cover expenses related to stabilizing and reopening their businesses that have been impacted by COVID-19 or civil unrest. Applicant must be small business owners (under 50 employees, with revenue less than $1 million) operating as of May 2019. Sole proprietors, independent contractors, and self-employed persons are welcome to apply. Additional requirements may apply.
What can this grant be used for?
The grant funds must be used to help small businesses recover from instability caused by the COVID-19 shut down or the recent civil unrest. This can include expenses related to payroll, benefits, interest on mortgage obligations, rent, utilities, and repairs.
What do I need to apply?
You’ll need to provide basic details about your business, its operations and the funds you need. We’ll ask you a standard list of questions to ensure you meet the qualifications. You’ll be required to qualify for and have a PayPal Business Account in order to receive the grant.
Is there a deadline?
Grant applications will be accepted until the $10 million in empowerment funds have been distributed.
How long is the review process? When can I expect to hear back?
We will work through applications as fast as we can. You will receive an email confirmation as soon as your application is submitted. You can expect to hear from us within 1-2 weeks.
What are the terms of the grant? Do I have to pay it back?
No, the funds are yours to invest in your business.
What amount can I qualify for? 
You will be asked to carefully calculate and request only the amount you need in order for your business to recover (up to $10,000 USD). We are working to empower as many small businesses as possible though this community-focused effort.
Why is PayPal doing this?
Inclusion is part of how we do business at PayPal, and we want to be thoughtful with a significant commitment to help address systemic racial injustice. Our central mission is democratizing access to financial services and creating new economic opportunities for as many people and businesses as possible. We were spurred to even greater action by recent events. As we continue to live through an unprecedented global pandemic and economic crisis that has disproportionately affected more poor people and communities of color, we knew that we had to do more to live our values.

How do I get updates on the application process?
You can contact AEO at
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