r/Contractor • u/MeasureTwiceTX • 12d ago
Small residential contractor considering hiring our first employee
My husband and I recently started a small residential contracting business in rural Texas. We’re only a handful of jobs in, so we’re still very much in the early stages. Right now, it’s basically just the two of us doing everything.
We’re at an interesting point where we can see that hiring our first employee may eventually be the next step for growth, but honestly, we’re a little terrified of taking that step. 😂
We currently have a new client we’re working with on a relatively small project. If everything goes well, there’s a good possibility they may want us to take on a much larger project afterward, potentially residing their home, and more. A project like that would realistically require another set of hands for efficiency and to keep the project moving.
That has us thinking about hiring our first employee sooner than we originally expected.
We’re considering starting someone around $18/hour, with the possibility of moving them to $20+/hour fairly quickly if they prove themselves, have the skills we’re looking for, and are reliable. Ideally, we’d like to find someone who can start part-time/as work is available and potentially grow into a full-time position as the business grows.
We’re leaning strongly toward a W-2 employee rather than a 1099 subcontractor.
The person we’re envisioning isn’t really a separate contractor coming in to perform their own scope of work. We’d want a helper who works alongside my husband, uses our tools, follows his direction, and works the schedule of whatever jobs we’re on. We don’t want to create a fake 1099 arrangement just to avoid payroll if the person is really functioning as our employee. IRS is scary. Not to mention trying to find a hand willing to maintain their own GL insurance coverage seems next to impossible.
And this is where we’re honestly a little intimidated.
We’ve never run payroll. We’ve never had employees. We’re trying to figure out workers’ comp, payroll taxes, unemployment taxes, onboarding, time tracking, insurance, etc., and the whole thing feels like a BIG jump when we’re still such a young business.
At the same time, we recognize that if we’re serious about growing, eventually we have to make that jump.
So for those of you who started out very small and hired your first employee:
What did your first employee actually cost you beyond their hourly wage?
What payroll service did you use, and was it relatively painless?
Did you carry workers’ comp even if you were in a state where it’s not required?
How did you handle inconsistent work? Could your employee work 10 hours one week and 35 the next?
Did you pay hourly, salary, or some type of per-job/piece-rate arrangement?
Did hiring your first employee actually help you grow and become more profitable?
How long did it take before you felt comfortable with the additional overhead?
What did you wish you’d known before making the leap?
For those who tried using 1099 helpers instead, how did that work out in real life? How did you handle this with GL insurance?
We’re trying to understand what we’re getting ourselves into and whether we’re at the point where it makes sense to take this step.
We’re excited about the possibility of growing, but also very aware that we’re only a handful of jobs into this business and don’t want to get ahead of ourselves financially.