Outsourcing HR Compliance: What are the Benefits?

Your small business can avoid the common pitfalls of compliance with HR tech and outside expert help.

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To small business owners who spend a lot of time on HR compliance: consider outsourcing

As a small business owner, your priorities may be focusing on business development, growing revenues, and creating an overall organizational strategy. Spending time wading through the United States’ complex compliance landscape is just about the last thing SBOs want to do — but remaining compliant is imperative to protecting your business and workers.

Outsourcing compliance means your small business can avoid the common pitfalls of compliance with professional, legally vetted help.

Are you an SBO thinking of outsourcing HR? Here’s what you need to know.

Who is outsourcing comlpiance right for?

Outsourcing HR compliance makes sense for SBOs who have decided they don’t need or want an internal HR staff, and aren’t prepared to deal with the complex regulatory landscape themselves.

What are the options?

The most common options for outsourcing HR compliance are the following:

  • Independent HR consultant: Onsite or online expert who helps set up HR infrastructure at your company. Usually this is one-time support for a fixed time period
  • HR consulting agency: One-time help or ongoing support to create HR practices for your small business
  • HR tech: Software that serves as a centralized hub for everything HR-related. Automates reporting, provides compliance information and deadlines, and makes payroll easy
  • HR service provider + tech: The same offerings as HR tech but with access to a compliance or HR team for expert advice
Compliance can be confusing and time-consuming — one third of SBOs spend more than 80 hours each year on compliance, according to a 2017 National Small Business Association survey.

What are the benefits?

Avoid compliance fees

Small businesses that outsource HR and compliance may feel more confident in their company’s compliance status. Rather than manually checking off all the proverbial boxes yourself, outsourcing HR compliance with the help of HR tech and professional, experienced experts reduces human error.

The right HR tech will flag issues and prompt you for missing information. You avoid the headache of staying on top of compliance-related deadlines and lower the risk of being slapped with hefty fines.

Free up time and rest easy with expert help

Compliance can be confusing and time-consuming — one third of SBOs spend more than 80 hours each year on compliance, according to a 2017 National Small Business Association survey. Yet, despite the long hours trying to understand legal requirements, SBOs report a lack of clarity on what they need to do.

Outsourcing HR compliance gives you the peace of mind and assurance of working with experienced professionals.

Save money on payroll

The 2018 median pay for HR managers was $113,000 per year. Outsourcing HR costs vary depending on your small business’s size and the platform you choose, but the prices come at a fraction of hiring a full-time HR specialist.

Having outsourced help can still get you the expertise you need to run your business and remain compliant.

What functions can businesses outsource?

Small businesses can outsource a variety of HR compliance functions:

Payroll compliance

  • Create, file, and format W2s and 1099s
  • Automatically calculate taxes with the option to pay them too
  • Provide support for FLSA overtime pay regulations for nonexempt employees

HR compliance

  • Automate onboarding compliance like collecting tax information and I-9 forms
  • Provide mandatory offboarding notices like COBRA

ACA compliance

  • Handle 1095-C forms for employees
  • E-file required forms with the IRS
  • Monitor each employee’s healthcare status

Special compliance concerns

  • Outsource specialized compliance concerns like navigating multi-state compliance or dealing with California’s AB5 requirements
  • Expert help simplifies otherwise daunting tasks for SBOs
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