First, don’t call your layabout college roommates who are going to be asking you for a job and tell them to get bent. We understand the impulse. It’s not productive.

You have undoubtedly heard every politician in America talk about the power of small business to create jobs, and it’s true. Most job creation in the US comes from small business. But a whole lot of the job destruction also comes from small businesses – the ones that fail. About 10 percent of all firms in the United States fail each year, according to the Small Business Administration. Most of those are new entrants.

Bad hiring decisions can contribute to these failures.  Many, many employment advice columnists online plead with startups and small businesses to hire the best people possible, because a bad hire can cost you a ton of money. The Bureau of Labor Statistics estimates that it costs an average of about $14,000 in direct costs, training time, screening time, search fees, and other indirect expenses to replace an employee. Few startups have that kind of money to burn. More importantly, a bad hire can cost you time that you probably don’t have – the time you could have used to be more productive and to solve problems but instead have to spend thinking about how to fire and replace your staffer.

And if this is the first time you’ve had to hire someone, then you’ve never been on the receiving end of the dozens, hundreds, or perhaps thousands of resumes you may need to sift through. Hooray for e-mail. Sadly, you’re not Ethan Hunt and this isn’t Mission Impossible. You’re probably not going to be able to just grab the right person like you’re rummaging around for a card at a Pokemon tournament. (If you don’t get that reference, you’re better off.)

So here’s a process to get you started.

What is the job?

First, ask yourself: Do I need to hire someone? Have I exhausted the ways the job could be restructured so I, or someone else, could do it without the cost of a new employee? Have I considered using freelancers, contract labor, or outsourcing? Are those options more expensive than a permanent hire? Small businesses recruit conservatively for a reason – early hires bring proportionately greater risk, because you probably have fewer people around to pick up the slack if something goes wrong in the the early stages of your business.

Then, define the job. What are you trying to accomplish? James R. Lindner, a professor of management at Ohio State University, laid out a series of steps for good job analysis for small businesses. Notably, he argues that small businesses can help prevent accusations of discrimination with a solid analysis. The important points:

Advertising for jobs

You can advertise a job in a zillion different places and expect to get responses. The quality of those responses might disappoint you, though. You should expect different results from Craigslist than you do from a professional headhunting service.

Before you start advertising, you may want to just start asking around. Your current employees, suppliers and clients – your network – may have some ideas about people to consider. If you trust the instincts of the people you do business with, their recommendations for potential hires may produce a better candidate than any advertising.

But to present yourself as an equal-opportunity employer, you must advertise a job widely in newspapers, with schools, and perhaps with community organizations, so people from a wide variety of demographic groups can find it. Posting your job online in a place like Craigslist or Monster.com probably counts. But posting on your own Web site might not – a recent ruling by the FCC on radio stations and their hiring rules is an example.  Federal law requires employers with 15 or more workers to advertise jobs widely. State laws vary, but can be more restrictive. For example, Iowa anti-discrimination law applies to employers with four or more workers, not 15.

Do not use language in an ad that is gender-specific. For example, it’s “sales person,” not “salesman” or “shop girl.” Don’t refer to race, age, ethnicity, religious affiliation, disability, or veteran’s status. It’s also against the rules now to refer to obesity or to genetically profile a potential applicant.

There are rare and relatively obvious exceptions to these discrimination rules, for jobs which only a particular category of employees can perform. A middle-aged man can’t plausibly claim age and gender discrimination for being excluded from a modeling job for teenage women’s clothing, for example. If a church is hiring a Baptist minister, it might be difficult for a Catholic to claim religious discrimination. But a Christian-oriented landscaping business can’t legally exclude non-Christians from employment consideration, or advertise that it’s looking for Christian employees – the grass can be cut equally easily by people of any faith.

Monster.com charges $1,000 to post an ad for a single job and two weeks of access to resumes within 100 miles of your workplace, with a limit of 400 views. A similar service at Careerbuilder – a job posting for a month and 50 resume views a day – costs $1,019. Yahoo’s HotJobs site varies in cost from around $220 to $370 to post a job for 30 days online and in local newspapers. Its HotHire service includes a resume matching function and a job posting for $399, while 30 days of access to HotJobs resumes costs $360.

There are free alternatives, of course, like Craigslist.org. Indeed.com doesn’t charge anything as long as your job advertisement has been posted on your Web site and you’ve submitted your Web page for indexing to Indeed. You can pay extra to highlight your ad, kind of like paying for a keyword in Google.

You’re going to get some spam responses. Guaranteed. You’re going to get a bunch of resumes from folks who lack the basic qualifications for the job. And you’re probably going to get a barrelful of responses for any job paying a decent salary.

Screening and interviewing

The combat begins. You’re going to have more resumes than time. Some people are straight out lying to you about what they can do, because they’ve got bills to pay and need a job. And you can expect most people to be on their best behavior . . . at least until after the interview is over.

You really need to know what’s important to you. You need to know which traits, experiences and talents you’re looking for. You’ll need to know what your tolerance is for typos, hackneyed phrases, unnecessary personal information and jargon in resumes. You already know how you’ll react to a job candidate with facial tattoos or blue jeans at the interview.

You need to know what personality and skills will best suit the job.

Your methodology is important here. A single job opening might draw 100 resumes. On a first pass, you can screen out the bad resumes – the folks who clearly shouldn’t get the job – and identify the folks you know you’re probably going to want to talk to.  Everyone else is a maybe. If you’ve got more than a dozen in the yes column, those maybes are probably nos. Because you’re going to have to call each of the yeses, to try to see if you can whittle the number of interviews down to a manageable figure.

Talking salary, broadly, might be enough. Small businesses tend to pay less than larger firms for nonprofessional positions. Exception: people with professional job skills – doctors, lawyers, PhDs, MBAs, et cetera – usually command a competitive salary, regardless of firm size, according to a Small Business Association study in 2005. You might want to give an overview of the job and a sense of the working environment and corporate culture at this point. Depending on the job market – and what you’re asking your prospective employees to accept – that might whittle a group of 12 down to five or six.  You’re not obligated to disclose an exact salary figure at this point, but to be taken seriously you’re going to have to give a ballpark range.

Rashmila Gurumurthy and Brian H. Kleiner wrote a paper for Management Research News in 2002 discussing the most effective techniques for hiring new people. In the academic journal, Gurumurthy and Kleiner talk about the value of developing your own interviewing style and listening actively – taking notes while interviewing so you have an objective record to review.

Here are a few pointers about the interview environment from their paper:

• Follow a logical sequence; i.e. greet the candidate and escort him/her cordially to your office.

• Create a proper interview environment; put the candidate at ease with brief small talk.

• Give an overview of what you want to accomplish in the interview and describe the job.

• Talk less and listen more, and know how to ask questions effectively.

• Answer any questions from the candidate.

• Close the interview pleasantly.

And here’s one they missed – have a form letter ready to sign, giving you permission to perform a background check on each one. If you work in a sensitive field – security and medical industries come to mind – or have lots of potential for employee theft or liability – electronics retail, home renovations – you’re going to want to know if your prospective employee is a bad risk. And some people just flat lie on their resumes.

A basic criminal record history and social security number trace will probably cost about $25. A more detailed search, covering county court records, bankruptcies, workers compensation claims, school and military records, and other information will probably cost about $100. Bear in mind, it’s improper to deny a candidate a job solely on the basis of workers compensation claims, unless those claims indicate a lingering inability to perform the job. And if you deny a job to someone on the basis of a background check, you owe it to the person to say what came up to cost them the job. Call a lawyer first.

Here are a few pointers, again from Gurumurthy and Kleiner, about good interview questioning techniques:

• Open-ended questions. "How do you feel about ...?", "What do you feel are the reasons for these troubles?", "Would you share with me ...?"

• Leading questions. "Do you not think it is important to ...” "How do you handle stress?"

• Questions about past performance. "Share with me an experience when ... Give me an example of. …"

• Hypothetical questions. "What if ...?"

• Multiple questions. "Tell me about your last work assignment. What went well and what did not? What did you learn from it? If given the chance to work at it again , what would you do differently?"

• Negative-Balance questions. "What is one personality trait that you are not proud of?"

• Negative Conformation. "Your answer to the last question was very interesting. How did this affect your work?"

• Reflexive questions. "Don't you agree?" Adding wouldn't you? couldn't you? etc. These help forward the conversation and help you maintain control of the conversation.

• Mirror statements. This is a subtle form of probing which can be used to counter silence. Just repeat the substance of the candidate's answer, then sit and wait for the candidate to expand on the mirror statement. "So you solved the problem with ...?"

• Loaded questions. This is especially useful to judge a candidate's decision-making approaches. "What would be your approach to a situation where ...?"

This might look like you’re trying to trick someone, but that’s not exactly the purpose of leading or negative-balance questions. Most people come into a job interview wearing, figuratively, a happy bunny rabbit mask. They’re probably dressed in their best suit. They’re avoiding profanity. They’re probably not drunk or high. Every move you make is being scrutinized for some sign of approval or disapproval. They may have gamed out their responses with friends or a coach.

Some people are exactly the same in their job interview as they are at work a year later. I don’t know any of those people, and I’ll bet you don’t either.

You need to peel back the mask while they’re fighting to keep it on straight. Weird questions, where an interview subject needs to think harder about the answer than about impressing you, can help.

Here are some questions you can’t ask in an interview without expecting to get sued afterward:

• Don’t ask anything that would reveal age, ethnicity, race, sexual orientation, religion, immigration status or marital status. That’s a black-letter-law violation of employment law. Don’t ask where she goes to church. Don’t ask when he graduated from high school. Don’t ask about her maiden name. And don’t try to find a cute way around this – a small business facing an employment discrimination suit is facing more trouble than it needs.

• Citizenship questions are out, too. You can ask if a candidate can provide proof of the right to work in the U.S., but not if a candidate is a citizen unless you have a government contract requiring citizen-employees. Green card holders have the same right to work as a citizen.

• Don’t ask about disability status. This goes to questions about prior health problems as well.  You can ask if the candidate is physically able to do the job without assistance, but the Americans with Disabilities Act protects the disabled from employment discrimination.

• Don’t ask if she’s pregnant. Not even if she’s ready to deliver in your waiting room. If her water breaks, she’ll probably mention something. And if she’s not pregnant, she’ll probably be a little ticked off. You can’t ask if she’s planning on getting pregnant, either. You’re also wrong if you ask how much someone weighs, unless it’s relevant to the job. Expect to get decked if you do.

The legal essentials

At this point, you need to make sure your legal ducks are in a row. Here’s a checklist, courtesy of the Small Business Association. It looks complicated, but if you’re in business, you’ve probably got most of this covered already.

• You need an Employer Identification Number (EIN), also known as a Federal Tax Identification Number. If you don't have one, get one from the IRS. They're free.

• You need a business license for your state and local area. Check here (http://www.business.gov/register/licenses-and-permits/) to see what you need.

• You need a business bank account, to keep your personal funds separate from those of your company. We've got partners who can help you with that.

• Every employee must provide you with a signed withholding exemption certificate (Form W-4) on or before the date of employment. You have to submit Form W-4 to the IRS. And everyone needs an Employee Eligibility Verification (Form I-9), which you need to keep for three years. Non US-citizens should already know to bring you their Employment Authorization and/or Green Card.

• You need to register with your state's new hire reporting program within 20 days of hiring a permanent employee.

• You need to have workers' compensation insurance for your employees. You may need to pay your state's unemployment insurance and disability insurance, depending on how many employees you have.

• You need a record-keeping system to track withholding taxes. Generally, each quarter, employers who pay wages subject to income tax withholding, Social Security, and Medicare taxes must file IRS Form 941, Employer's Quarterly Tax Return. Small businesses with an annual income tax liability of $1,000 or less may file IRS Form 944 once a year instead. The IRS says you need records for four years. Presume you need them forever. We've got partners who can help you with that, too. [link]

• Every year, you must report to the federal government wages paid and taxes withheld for each employee, using Form W-2, Wage and Tax Statement. You must also file IRS Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, if you paid wages of $1,500 or more in any calendar quarter or you had one or more employees work for you in any 20 or more different weeks of the year.

• State and federal laws require employers to prominently display certain posters in the workplace that inform employees of their rights and employer responsibilities under labor laws. The posters are free from federal and state labor agencies. Visit the Workplace Posters page for specific federal and state posters you'll need for your business.