I recently hosted a networking session for a dozen entrepreneurs, mostly owners of small, local businesses. Before we got started, I asked each of them to name their single biggest challenge. Hiring and retaining employees showed up on nearly everyone’s list.

That's not surprising. Small businesses compete for talent against companies with bigger budgets, deeper benefits packages, and dedicated HR departments. But you don't need a large staff, or even a formal HR function, to hire well. You need a disciplined, repeatable process.

Here are five suggestions for attracting and retaining talent for your small business.

1. Build Your Foundation

Before you post a single opening, decide whether the role calls for an employee or an independent contractor. Each comes with real trade-offs in cost, control, and administrative burden, and misclassifying a worker can create tax and legal headaches down the road.

Block Advisors lays out the practical differences between the two in its Guide to Hiring a Contractor vs. an Employee, which is worth reading before you make that call. Once you know you're hiring an employee, make sure your business is legally prepared to take one on:

Apply for an Employer Identification Number through the IRS.

Register for state and local withholding taxes.

Secure workers' compensation and unemployment insurance as required in your state.

Establish an automated payroll system to handle pay cycles, benefits, and tax reporting.

Confirm you're complying with federal and state labor law. The U.S. Small Business Administration's Guide to Hiring and Managing Employees is a helpful guide.

None of this has to be done manually. Platforms such as Gusto, ADP, and Paychex bundle payroll, tax filings, and compliance support........

© Forbes