Hiring plan for a small business: a one-page plan an owner can actually run
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A hiring plan for a small business is one page that answers five questions before you post a job: what work is not getting done, whether an employee is the right answer, what the person will really cost, how much of the owner's time the search will take, and when the new person must be working. Large-company hiring plans are built for recruiters and many roles at once. An owner hiring one or two people a year needs something shorter that protects the two scarcest things in a small business: cash and the owner's attention.
If this is your first employee ever, read how to hire your first employee for the registration and paperwork steps. This page is about deciding and planning the hire, whether it is your first or your fifteenth. For a multi-role version with sourcing and interview stages in more detail, see the hiring plan template.
Step 1: name the work, not the job title
Start with a list of the work that is not getting done or is being done by the wrong person, usually the owner. Write it as tasks with hours per week:
- Answering phones and booking appointments: about 12 hours a week, done by the owner between jobs.
- Quotes and invoices: about 6 hours a week, done on Sunday nights.
- Second crew for residential installs: currently turning away 3 to 4 jobs a month.
The list often shows two different hires hiding inside one vague idea ("we need help"), or shows that the real need is 15 hours a week, which is a part-time role, not a full-time one. It also gives you the first 90 days of the new person's work, which is what a good job posting should describe.
Step 2: employee, part-time, contractor or not yet
| Option | Fits when | Watch for |
|---|---|---|
| Full-time employee | The work is ongoing, core to the business and fills most of a week | Committing to payroll before the revenue is steady |
| Part-time employee | The work is ongoing but under about 25 hours a week | Part-timers are still employees: same tax and paperwork duties |
| Independent contractor | The work is bounded (a project or a specialist task) and done the contractor's own way | Calling someone a contractor while setting their hours and methods |
| Not yet | The work could be removed, automated or done by changing a process | Waiting so long that the owner becomes the bottleneck on growth |
The employee-or-contractor choice is a legal question, not a preference. The IRS looks at behavioral control, financial control and the relationship of the parties (IRS Topic no. 762, as of September 2026). If you will tell the person when to work and how, and expect them to keep doing it, plan for an employee. For bounded work done by a real contractor, how to interview a freelancer covers the selection side.
Step 3: what the hire really costs
Wages are the visible part. An employer also pays its share of payroll taxes and insurance that a contractor's invoice would not include. The fixed federal parts:
- Social Security and Medicare: the employer pays 6.2 percent Social Security tax on wages up to the annual wage base ($184,500 for 2026, per the Social Security Administration) and 1.45 percent Medicare tax on all wages, matching what is withheld from the employee.
- Federal unemployment (FUTA): 6.0 percent on the first $7,000 of each employee's wages, reduced by a credit of up to 5.4 percent for paying state unemployment tax on time, for a usual net rate of 0.6 percent, or $42 per employee per year (IRS Topic no. 759). Employers in a credit reduction state pay more.
State unemployment insurance and workers' compensation vary by state, industry and claims history; get the actual rates from your state and your insurer rather than guessing. Then add anything you choose to provide: health insurance, paid time off, a vehicle, tools, a phone, a laptop, uniforms, training time.
A worked example
| Item | Basis | Annual cost |
|---|---|---|
| Wage | $22 an hour × 2,080 hours | $45,760 |
| Social Security and Medicare, employer share | 7.65% of $45,760 | $3,501 |
| FUTA | 0.6% of $7,000 | $42 |
| State unemployment | Example rate 2.7% on a $12,000 wage base | $324 |
| Workers' compensation | Example quote from insurer | $1,400 |
| Health insurance contribution | Example: $350 a month | $4,200 |
| Tools, phone, uniforms (year one) | Example | $1,500 |
| Total, year one | $56,727 | |
In this example, the state unemployment rate and wage base, the insurance quote and the benefit figure are invented; replace them with yours. The result, about 1.24 times the wage, is specific to these inputs. The useful habit is to set the pay only after the total is known and checked against the revenue or time the hire frees up.
Step 4: count the owner's hours
In a small business the owner usually writes the posting, screens, interviews, checks references, makes the offer and trains the new person. That is real time taken from sales and delivery, so plan it:
| Task | Typical owner time (example) |
|---|---|
| Write the posting and set up the application | 2 hours |
| Review applications | 2 to 4 hours |
| Phone screens: 8 × 20 minutes | about 3 hours |
| Interviews: 4 × 45 minutes, plus a working trial for the final 2 | about 6 hours |
| References and offer | 2 hours |
| First two weeks of training | 10 to 20 hours |
If those hours land in your busiest month, the hire will be rushed or late. Block them on the calendar when you approve the plan. A paid working trial, covered in how to run a job trial day, often tells a small employer more than a second interview does.
Step 5: set the date and work backwards
Pick the date the person needs to be working on their own, not the date they start. Then subtract: training time, the candidate's notice period (two weeks is common in the US for someone already employed), a week for the offer and references, two to three weeks for screens and interviews, and one to two weeks for applications to arrive. For a role that must be running by the busy season, that often means posting two to three months ahead.
The one-page plan
HIRING PLAN — [business], [role] Date: [ ]
WHY: [the work not getting done, in hours per week, and what it costs us]
THE ROLE
Title: [ ] Full-time / part-time: [ ] hours Employee / contractor: [ ]
First 90 days, this person will: 1. [ ] 2. [ ] 3. [ ]
Must-haves (max 3): [ ] Nice-to-haves: [ ]
COST
Pay: [$/hour or salary] Loaded year-one cost: [$ ] (see worksheet)
Paid for by: [revenue from X jobs a month / owner hours freed for sales]
DATES
Working independently by: [ ] Start by: [ ]
Offer by: [ ] Interviews: [dates] Post by: [ ]
HOW WE WILL FIND PEOPLE
[customers and staff referrals → local job board → trade school / community]
HOW WE WILL DECIDE
[phone screen questions] → [interview] → [paid trial] → [references]
Decision made by: [owner] Second opinion from: [ ]
OWNER TIME BLOCKED: [dates and hours]
NOT HIRING IF: [e.g. slow season revenue below $X by date]Legal thresholds as you grow
Some federal employment laws apply only above a headcount, so a hiring plan that takes you across a line should say so. The EEOC says Title VII and the ADA cover employers with 15 or more employees and the ADEA those with 20 or more (EEOC, Threshold Issues). The FMLA covers private employers with 50 or more employees in 20 or more workweeks in the current or previous year (DOL Fact Sheet #28). The Affordable Care Act's employer provisions apply to employers that averaged at least 50 full-time employees, including full-time equivalents, in the prior year (IRS).
State and local laws often start much lower, sometimes at one employee, for discrimination, paid sick leave and pay transparency. Check your state's labor department before you post, and see pay transparency laws by state if your posting needs a pay range.
A filled example
Business: a 6-person heating and cooling company (invented).
Why: the owner spends about 18 hours a week on phones, scheduling and invoices. Two to three service calls a week go unanswered in peak season.
Role: office coordinator, full-time employee. First 90 days: run the booking calendar, send quotes and invoices the same day, chase unpaid invoices over 30 days.
Cost: $22 an hour; loaded year-one cost about $57,000. Paid for by answering the missed calls (about $1,500 of work a week at peak) and by moving 18 owner hours a week back to sales.
Dates: working independently by May 1 for cooling season. Start by April 1, offer by March 13, interviews the weeks of February 23 and March 2, post by February 9.
Decide: 20-minute phone screen, 45-minute interview, a paid half-day on the phones with the owner listening, two references.
Not hiring if: the bank line of credit is not renewed by February 1.
Questions people ask
Does a small business need a written hiring plan?
It needs one page, not a binder. Writing down why you are hiring, what the person will do in their first 90 days, what it costs and when you need them working catches the most common small-business mistakes: hiring too late, hiring for the wrong work, and underestimating the cost beyond wages.
How much does an employee cost beyond their wage?
At minimum, the employer's 7.65 percent share of Social Security and Medicare tax, federal unemployment tax (a net 0.6 percent on the first $7,000 of wages for most employers), state unemployment tax and workers' compensation insurance. Benefits, equipment and training come on top. Price all of it before you set the pay.
Should a small business hire an employee or use a contractor?
Use the facts of the work, not the cost, to decide. If you will set the hours, direct how the work is done and expect it to continue indefinitely, the person is probably an employee under IRS and Department of Labor tests. Contractors fit bounded work done the contractor's own way, such as a website build or a bookkeeping clean-up.
At what size do more employment laws apply?
Several federal thresholds are tied to headcount: Title VII and the ADA apply at 15 employees, the ADEA at 20, the FMLA at 50 employees in 20 or more workweeks, and the Affordable Care Act's employer mandate at an average of 50 full-time employees including equivalents. Many state laws start lower, some at one employee.