Can you hire and what does it cost? Here is what you need to know

If you cannot keep up with everything yourself in your e-commerce business anymore, it may be time to hire someone. Here we answer five important questions about what it means to become an employer and how it works, so you have a clear picture of what is coming.

Who counts as an employee?

Depending on your business structure, you may already have an employee: yourself! That is the case if you have a limited liability company, as an owner working in the company you are considered an employee and receive a salary like any other employee. The same applies if you are a member of a cooperative: working in the operation makes you an employee receiving a salary.

If, on the other hand, you have a sole proprietorship or partnership (or limited partnership), you as the owner are not an employee of the company and do not receive a regular salary. Instead you make "owner draws" from the profit.

When should you hire?

Reasons for hiring can vary widely. You might do it because you cannot keep up with all tasks yourself (reactive) or to invest in a new area (proactive) hoping it will pay off down the road.

Whatever the situation, you need to think about why you need an employee (sometimes buying in services is better!) and make sure you can afford it, which brings us to the next question.

What does an employee cost?

An employee costs. A lot. Besides salary, you also pay payroll taxes and employer social contributions. The exact cost depends on factors including the employee's age and whether you add insurance or benefits.

Fortunately, most countries' tax authority or labor agency offers a salary calculator that helps you estimate the cost of an employee. Plug in approximate salary and birth date, and you get a calculation with and without insurance. Complement with pension cost calculators where relevant.

Psst! If you do not know who you will hire, just test different birth years, what matters is varying the year to see what an employee in a given age range would cost.

With the calculation in front of you, you may feel you cannot afford to hire. But do not jump to conclusions! There are many types of employment and several cheaper alternatives to consider. Maybe you can start with a part-time hire? Or use government wage subsidies for hiring through your local employment agency? What is appropriate depends on your shop's needs and the kind of skills you are looking for.

How do you hire someone?

Hiring someone for the first time is a big step and you may feel unsure where to start. But in broad strokes it is not as complicated as it can seem. You need to:

• Register as an employer. Running a limited liability company or cooperative you are already registered (since you are an employee yourself, see the first question). With a sole proprietorship or partnership you may need to register as an employer with your country's tax/labor authority.
• Recruit. Consider which employment type (permanent or fixed-term in some form) is appropriate and whether you want full-time or part-time. Define the tasks the employee will do and the skills required. Then spread the job ad, bring in candidates for interviews and so on, until you find the right person.
• Write an employment contract. When you have the right candidate you need to agree on an employment contract. It should set out the start date, tasks, employment type, vacation terms and more. Most countries' labor authorities have guidance on what an employment contract must contain.

What laws must you follow?

Hiring for the first time means familiarizing yourself with a number of new laws, collectively called employment law. These laws govern the relationship between you as employer and the employee. As an employer you typically need to follow:

• Employment protection law
• Working time law
• Vacation law
• Work environment / health and safety law
• Parental leave law
• Anti-discrimination law

Our advice is to take it one step at a time and read up on each topic separately. Your country's main local government association or labor authority usually publishes a complete list of employment-related laws.

Another tip is to check the legal advice FAQs from national small business associations and small business law resources for specific questions.

Once you have the basics down it is just a matter of getting started. Write the job ad and start looking for your first team member!