GUIDE 2024

What Does HR Do for Small Business?

HR is critical in small businesses because it ensures the seamless operation of numerous people-related procedures. 

HR teams are responsible for cultivating a pleasant work environment and maintaining HR compliance with labor regulations, from recruiting employees through payroll and employee benefits. 

In this post, we will look at the core HR roles in small businesses and compare the advantages of in-house vs outsourced HR. 

What is the Role of HR?

HR departments in small businesses play various critical human resources functions in ensuring the organization’s overall success. They are in charge of recruiting and selection, ensuring that competent individuals are attracted and hired for unfilled jobs. Professionals in the HR department create job advertisements, conduct interviews, and verify references to discover the greatest match for the small business.

Also, the human resource manager is in charge of the recruitment of employees and their orientation. They make certain that new employees get the essential training and information on corporate rules, processes, and benefits. HR assists workers in feeling welcomed and prepared to perform successfully by supporting a seamless transition into the small business.

Furthermore, HR is critical to the interactions of employees. They mediate and settle disputes, organize performance reviews, and provide advice on the development of employees and career advancement. HR professionals serve as a liaison between management and workers, supporting a healthy and effective workplace.

3 Key HR Functions in Small Businesses

HR handles different responsibilities in a small business, ensuring the organization’s smooth operation and professional development. These duties include payroll management, benefits administration for employees, and labor law compliance. The following is a detailed description of the primary tasks of an HR for small business:

Payroll Management: Payroll management must be precise and efficient for a small business. HR is in charge of payroll operations, ensuring that workers are paid on time and in accordance with labor laws. They compute wages, handle tax deductions, and handle any payroll-related questions or difficulties.

Benefits Administration: The HR department is in charge of programs for employee benefits such as health insurance, retirement pensions, and paid time off. They manage enrollment and eligibility verification and provide a resource for workers looking for information or help with their benefits.

Compliance and Legal Matters: Complying with labor laws and regulations is critical for a small business. HR experts monitor changes in employment legislation, preserve personnel records, and ensure the organization complies with applicable rules. They also handle employment-related legal problems, such as discrimination claims or workplace safety concerns.

In-House HR vs Outsourcing

A small business may either build an in-house human resources department or outsource its HR needs to external companies when it comes to handling HR activities. HR functions in-house entail the small business having a dedicated staff of HR specialists in charge of handling all HR procedures and tasks. It enables direct control, customization, and personalized assistance according to the company’s culture and requirements.

On the other hand, outsourcing HR team entails collaborating with an external source who specializes in HR professional services. As the external supplier conducts multiple HR activities on behalf of the business, this option provides access to knowledge, scalability, and cost-effective solutions.

Many variables influence the decision between an in-house and an outsourced HR manager. Some examples include the size of the company, the budget, the complexity of the HR demands, and the availability of resources and experience inside the organization.

organizations should carefully examine their specific needs and weigh each technique’s benefits and drawbacks to choose which best corresponds with their objectives.

List of Top HR Outsourcing Services

As of now you might have made up your mind to use the top HR outsourcing services. But with the wide variety of options available in the market getting confused in legit. Here is a list of the best HR outsourcing services you need to check. 

Bambee HR Outsourcing

Bambee HR Outsourcing is a full-service HR software solution tailored for small organizations. Bambee provides a variety of HR department services to organizations via its user-friendly platform and qualified HR consultants. Let’s take a deeper look at Bambee’s features, cost, advantages, and downsides.

Capabilities: Bambee offers various facilities like onboarding employees, HR compliance management, performance management, and professional HR consultation. Small business owners may also use Bambee’s platform to optimize their HR procedures by centralizing current data of employees, storing documents, and automating important HR functions.

Price: For specific price information, please visit the Bambee website. They provide customizable pricing options that are suited to the unique demands and company size.

Pros: Bambee provides organizations with access to an HR team for HR issues, guarantees legal compliance, enables process automation, and more.

Cons: As an outsourced HR solution, Bambee may not offer in-person assistance, which some small business owners prefer. Besides, smaller organizations may find the expense of outsourcing the HR department an issue.

Insperity HR Outsourcing

Insperity HR Outsourcing is a respected HR outsourcing service that caters to small company requirements. Insperity emphasizes offering complete assistance from HR professionals, providing a suite of services aimed to expedite HR procedures and reduce the load of human resources administration. Let’s look at Insperity’s features, costs, benefits, and drawbacks.

Capabilities: Insperity provides many HR services, such as payroll administration, benefits management, risk management, and HR compliance support. Their platform connects a business with HR specialists who can handle a variety of HR department services, including employees onboarding, HR policy formulation, performance management, and training programs.

Price: It is best to check the Insperity website for complete price information.

Pros: Insperity provides organizations with end-to-end help in managing human resources by offering a wide variety of HR solutions. It is also flexible to expand according to the company size.

Cons: One common drawback is that you will not have control over some HP operations. Besides, a small business can find it a little expensive.

Zenefits HR Outsourcing

Zenefits HR Outsourcing is a prominent HR outsourcing solution that provides a full array of services designed specifically for any small business. It streamlines HR administration with its cloud-based platform and user-friendly interface, enabling companies to optimize their procedures and concentrate on core operations. Zenefits’ features, costs, advantages, and drawbacks are the following.

Features: Benefits administration, onboarding, time and attendance monitoring, performance management, and compliance support are just a few of the HR capabilities offered by Zenefits. Its technology enables organizations to automate HR operations, including benefits for employees, record-keeping, payroll processing, and benefit registration.

Price: To understand Zenefits’ pricing, you should visit its website to understand its plans better.

Pros: Zenefits has a user-friendly interface for easy handling and provides assistance in HR compliance with legal guidelines. It also provides automation and integration facilities to minimize manual duties.

Cons: Zenefits has limitations when it comes to the customization part. It may not match the requirements of every company. Besides, there are some additional pricings are there. It might not be beneficial for every small business.

ADP HR Outsourcing

ADP HR Outsourcing is a well-known and renowned HR outsourcing service that serves organizations of all kinds, including any small business. ADP streamlines HR administration by offering full services and cutting-edge technology, enabling companies to concentrate on their primary goals. Check out below the features, costs, benefits, and drawbacks of ADP HR Outsourcing.

Features: ADP’s HR functions include payroll processing, benefits administration, time and attendance monitoring, talent management, and compliance assistance. This platform offers companies a unified solution for storing personal data, automating HR operations, and providing insights via sophisticated analytics.

Price: It is best if you check the online website of ADP HR outsourcing for the pricing information.

Pros: ADP offers a full range of HR services, including payroll, benefits, and compliance. It is a scalable tool with the integration of modern technologies. Besides, you will get HR compliance with consultations.

Cons: It needs some time to understand as you have to learn it before using it effectively. Thus, you will need a learning curve. Besides, it provides some features that might not be cost-effective for every small business owner.

TriNet HR Outsourcing

TriNet HR Outsourcing is a full-service HR outsourcing solution for small and medium-sized organizations. TriNet’s portfolio of services and experience enables organizations to manage their HR activities and concentrate on strategic development successfully. The following are some of TriNet HR Outsourcing’s features, costs, benefits, and drawbacks.

Features: TriNet provides human resource management services, including payroll processing, benefits administration, risk management, compliance assistance, and talent management. It is a platform that offers employers a unified solution for managing the data of employees, automating HR operations, and gaining access to vital information.

Price: Go to the website of TriNet HR Outsourcing. There you will see different pricing plans that can give you more clarity.

Pros: TriNet HR outsourcing provides expert assistance to companies with comprehensive HR solutions. Risk management is crucial for companies, and its assistance is also available with this software.

Cons: This software also requires a learning curve to use it efficiently for your use. Besides, it guarantees personalized solutions with customized pricing. But some firms might think it is a bit expensive.

BambooHR HR Outsourcing

BambooHR HR Outsourcing is a popular HR outsourcing solution for small and medium-sized organizations. This tool streamlines HR administration with its user-friendly platform and extensive capabilities. It enables organizations to simplify their operations and concentrate on their primary goals. Let’s look at the features, costs, benefits, and drawbacks of BambooHR HR Outsourcing.

Features: BambooHR has a number of features to simplify HR procedures and increase efficiency. The services available include applicant monitoring, onboarding, time and attendance tracking, performance management, and benefits administration. The user-friendly interface of BambooHR makes HR chores easier.

Price: BambooHR has detailed pricing available on its website.

Pros: BambooHR has a user-friendly interface for simple operations and has the integration capabilities to improve data integrity and consistency. It also offers excellent customer service support to the companies.

Cons: This HR outsourcing tool offers users with restricted resources. Besides, it is dependent on the number of personnel. There is a scope for improvement in BambooHR, like it may need extra moduled or higher-tier plans.

Paychex HR Outsourcing

Paychex HR Outsourcing is a well-known HR outsourcing provider offering complete services to organizations, including small firms. Paychex’s superior technology and experience assist organizations in streamlining their HR procedures, reducing administrative load, and remaining compliant with changing legislation. Now, look at some features, costs, benefits, and drawbacks of Paychex HR Outsourcing.

Features: Paychex provides several HR services to assist organizations. Payroll processing, time and attendance monitoring, HR compliance assistance, and more are among the functions available. It is compatible with various corporate systems, allowing for smooth data transfer and increased efficiency. Additionally, it offers powerful reporting and analytics capabilities, allowing firms to obtain useful insights into their HR data.

Price: It’s preferable to check the Paychex website for full-price information since they provide customized pricing depending on company size and individual demands.

Pros: With comprehensive HR solutions, Paychex assists any business in navigating complicated compliance requirements and mitigating legal risks. It also offers HR process automation and the scope of scalability.

Cons: With Paychex, the pricing plans are customized, but some small firms might see it as a non-cost-effective option. Also, you need to give some time to learn the software before using it to manage HR responsibilities.


Here is a list of some common frequently asked questions related to the role of HR for small businesses. 

How can human resources assist a small business in attracting top talent? 

Human resources can help small firms attract top talent by writing attractive job descriptions, using diverse recruiting channels, and developing efficient applicant screening and selection procedures. They may also provide competitive remuneration and benefit packages to recruit top applicants.

Can small firms save money by outsourcing human resources? 

Outsourcing the HR team may be cost-effective for small organizations since it removes the need for dedicated in-house human resources professionals and related overhead expenses. It enables the company to have access to knowledge and resources without having to hire full-time staff.

What are the dangers of a small business not having an HR department?

A small business without an HR department faces a number of hazards. Labor law compliance may be jeopardized; employees’ relation problems may need to be addressed. Besides, HR needs like payroll and benefits administration may become cumbersome for other staff, impacting productivity and morale.

How can human resources help develop a healthy work culture? 

Human resources are critical in building a healthy work culture by encouraging open communication. It also helps by conducting employee engagement activities, offering training and development opportunities, and swiftly and equitably resolving complaints and grievances of employees.

Josh Fechter
Josh Fechter is the founder of HR.University. He's a certified HR professional and has managed global teams across 5 different continents including their benefits and payroll. You can connect with him on LinkedIn here.