Hiring employees: What founders need to consider

No company can be built up in the long term as a one-man show. But hiring employees is a complicated process with many bureaucratic pitfalls. An overview of the most important stumbling blocks.

Geniuses have a reputation for being rather socially intolerant. The image of the troubled tinkerer working alone in his garage has already been shaped by famous eccentrics like Nikola Tesla. But that's not really practical if you want to turn a good idea into a functioning company. It won't work without employees. No one has the overview and the skills to do everything themselves in the long term; experts are needed in all areas, from human resources management to sales and marketing.

Selecting employees and hiring them correctly, however, is not that easy. As expected, the regulations are strict, especially in Germany, and a personnel miscalculation can be expensive, especially at the beginning of a company's history. A small checklist for prospective employers.

How do I find the right employees?

Very important: Don't just start looking wildly. Founders should think very carefully about the tasks for which they need relief in the first place. For example, do they need a marketing specialist or someone who is familiar with sales? In addition, it should be immediately clear how much working time the new colleague should bring with him or her and how much budget is available for his or her salary. The more concrete the requirements and the offer, the more likely a suitable candidate will come along in the end.

Especially in the early stages of a company's development, it may make sense not to hire a full-time employee directly. Instead, a mini- or midijobber may be sufficient at first. In this case, for example, social security contributions are largely omitted; only lump sums have to be paid. Student assistants also do not have to go through many of the formalities that are required for a full-time employee.

Of course, company founders can use the usual portals for their search. Job boards such as Stepstone are a first port of call. There are also special portals for startups, such as startupjoblist.com, as well as newsletters for the scene. Especially for early employees, it can also be worthwhile to scan your own network and see if there is a suitable candidate in your circle of acquaintances.

What formalities do I have to observe?

Regardless of which employment relationship the employee enters, he or she will need a clean employment contract in any case. There are a number of things that absolutely have to be included here, such as working hours, place of work, vacation regulations, the probationary period and notice periods. Templates are often available online - for example, from the chambers of commerce and industry - but you can be on the safe side if you consult a lawyer.

Once the employment relationship has been signed, the employer must apply for a company number from the Federal Employment Agency to officially register as an employer. This can now also be done online. This number is then needed, among other things, to pay social security contributions. This can be done at the health insurance fund responsible for the employee. The employee must provide the necessary documents - for example, membership certificate and pension insurance number.

In addition to social insurance, employees must also be registered with the statutory accident insurance. This pays out in the event of accidents at work and occupational illnesses. The employer pays the contributions here, so there are costs for the entrepreneur. Last but not least, the tax office also expects a report on the new employees. This is because the employer must withhold wage tax for them. This can now also be done via the Internet. How high the rate is depends on the payment, it goes from 0 to 50 percent. The employee's tax bracket also plays a role.

In the case of the production and sale of foodstuffs, there is also a visit to the health authority. This is because the office also expects a report and a clearance decision from the public health officer for the employee.

What costs should I expect?

Employees are not cheap. The actual costs, which actually always exceed the gross salary, should therefore be calculated by prospective employers beforehand. As already described, he or she must add health, pension, unemployment and long-term care insurance to the actual salary, as well as statutory accident insurance. In addition, there are pay-as-you-go payments (to protect the employer against the long-term absence of its employees) to the health insurance funds and insolvency benefits (to protect employees in the event of insolvency).

It is difficult to make general statements, but about 20 percent of the costs are usually added when a start-up hires new employees. With a gross salary of 2,000 euros, the so-called employer's gross without company pension plan, church tax and the like, with tax class 1, adds up to 2,400 to 2,500 euros.

But if you want to get out of your own garage in the medium term, there's no getting around it.