Everything to Know About Small Business HR Outsourcing

Outsourcing your HR frees up your time, so you can focus on growing your small business.


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For many small businesses, spending time, money, and energy on human resources feels unproductive. Menial tasks like payroll and hours tracking eat into time that could be spent on company growth.

Sound familiar? Here’s the good news — small business HR outsourcing software can tackle many (or all) of your HR responsibilities, leaving you time to focus on the big picture.

What is HR Outsourcing Services?

When small businesses outsource their HR services, they assign a variety of human resource tasks to a third-party organization. Traditionally, the burden has fallen on the shoulders of brick-and-mortar firms.

Today, though, small business HR outsourcing is easier than ever. HR software provides a one-stop solution that’ll adapt to your specific needs. HR outsourcing software organizes workflow into a streamlined, super-accessible platform. With the click of a mouse, you can see all the available information about each employee.

Small business HR outsourcing is beneficial in many ways, but it’s most useful for one thing: compliance.

Employment laws are constantly evolving, and it’s easier than you’d think to violate them. Non-compliant companies can find themselves in a world of trouble.

When you’re trying to get your company off the ground, an unwelcome lawsuit can drain what little resources you have at your disposal. HR outsourcing helps you keep track of legal obligations, protecting you from expensive (and time-consuming) lawsuits.

What Type of HR Functions Are Generally Outsourced?

Small businesses HR outsourcing usually takes care of functions that don’t require face-to-face interaction.

Some examples of HR functions that are outsourced include:

  • Time tracking
  • Payroll
  • Recruiting
  • Staffing
  • Employee benefits

Responsibilities that are more hands-on, like conflict mediation, are typically kept in-house.

In reality, though, any HR function can be outsourced. It’s up to you to assess your small business’ needs and make the choice that’s right for you.

How Much Does it Cost to Outsource Human Resources?

Not as much as it would cost to hire a full-time HR specialist. Small business HR outsourcing is always a more cost-effective option.

Costs vary depending on the size of your small business and the platform you use. If you’re charged in fixed-price increments, you can expect to pay $2 to $200 per employee per month. If you’re paying a percentage, you’ll likely pay 2% to 20% of each employee’s yearly salary per month.

What you pay also depends on your plan. Most HR software will start you off with a few key features, but premium membership is where you’ll really reap the rewards.

Can You Outsource Human Resources?

Absolutely! Even the smallest companies can benefit from small business HR outsourcing. In reality, the smaller your business is, the more beneficial it is to outsource human resources. When you have a small staff, you rely on each of your employees to take on a variety of responsibilities. Sales representatives aren’t just sales representatives. Accountants aren’t just accountants. To make a small business work, each member of your team has to fill in as they’re needed.

The more hats each person has to wear, though, the less they’re able to focus on their official position. If you find that you (or your employees) have to take on more than you can handle, that’s a clear sign that it’s time to outsource HR. Take some time to establish your needs and find a plan that works for you.


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