What is a performance review and how often should I do them?

The failure specific to small businesses is that nothing is said until something is wrong, and then it arrives as accumulated frustration rather than as feedback. Somebody has been doing something differently from what you expected for four months, you never mentioned it because each instance seemed minor, and the eventual conversation is far harder than nine easy ones would have been. Frequency prevents that, not formality.

A short monthly conversation works better than an annual event. Three questions cover it: what went well, what was harder than it should have been, and what would make the next month better. That last question surfaces obstacles you can remove, which is most of what a small employer can actually offer. Fifteen minutes, consistently, outperforms an hour once a year by a wide margin.

Keep a written record even when the conversation is informal. A few lines after each one, agreed by both, creates the history that makes a later decision defensible and prevents the two of you remembering the year differently. It costs minutes and it is the only protection you have if something goes wrong later.

Separate pay conversations from feedback conversations by several weeks. When they happen together, nothing else in the discussion is heard, and the feedback you wanted to give becomes a justification for a number rather than something useful.

Ask for feedback in the other direction at the same time, and mean it. A small employer has fewer sources of correction than a large one, and the person doing the work sees things you do not. The question that produces useful answers is not whether they have any feedback, which invites politeness, but what is the most frustrating part of working here, which invites specifics. Then act on at least one thing, or you will not be told again.

Write the summary yourself within a day and send it to the other person, because a conversation neither party recorded becomes two different memories within a month. Three or four lines covering what was discussed and what was agreed, with an invitation to correct anything, takes minutes and creates the record that makes any later decision defensible.