Understanding HR for Small Business: Key Functions and Benefits

By Jeanette Coleman, SPHR & SHRM-SCP on Sep 13, 2023
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Human resources (HR) looks a bit different within every industry and company, but there are many common tasks and concepts that unite HR needs across the business world. When we’re defining HR for small business, we’re generally discussing either the team members that serve as valuable resources to a company or the people-management function of a company. This second concept is also occasionally referred to as human resource management (HRM). 

In this post, I’ll share an overview of what HR for small business looks like, the key HR functions that come into play at almost every company, and finally, when a small business should consider delegating or outsourcing HR. 

HR Outsourcing Company

What is Human Resource Management?

Human resource management refers to the strategic and coherent approach to the management of an organization's most valuable assets: The people working there who individually and collectively contribute to the achievement of its objectives.

HRM encompasses a range of functions and activities, including but not limited to recruitment and selection, training and development, compensation and benefits, performance management, employee relations, legal compliance, health and safety, HR strategy, culture and change management, and diversity and inclusion.

It's true, HR is complex and important, just like any other function of your business. Often, small businesses don’t have the resources to have a dedicated in-house team of HR experts available to handle functions, but that doesn’t mean they have to miss out on the benefits available to them. Outsourcing HR to a third-party provider, like a PEO, provides a solution.

Let's dive into the key HR functions at small businesses.

RELATED:Simplifying Your Business Cuts Costs, Reduces Liability >> 

Key HR Functions for Small Businesses

No matter what type of small business or start-up you run, there are certain tasks you’ll have to take care of. The role of human resources within a company (no matter its size or industry) spans the gamut. HR is inclusive of so many functions and sub-functions that even the most adept business owner or manager could have trouble remembering—let alone mastering—them all.

Here is a short list of the most common key HR functions and how they help your business grow: 

HR for Small Business Checklist

General human resources 

  • Employee relations: Seeks to improve employee loyalty, productivity and workplace culture.

  • Recruitment and retention: Helps you find (and keep) the talent your business needs to thrive. 

  • Organizational development: Aligns your HR processes to support profitability and your overall goals. 

  • Training and development: Ensures you are investing in the growth of your people. 

  • HR compliance: Ensures you are following all applicable HR-related laws, rules, and regulations (which may change depending on your industry, employee count, and locations). 

  • Unemployment claims: As an employer, responding to unemployment claims is mandatory if you want to object to a former employee’s claim. 

Employee benefits

Workers’ compensation, employee safety and risk management

Payroll and payroll taxes

  • Payroll services and payroll tax administration: Ensuring employees are paid correctly and on time can be stressful, but getting it right every time is non-negotiable. 

  • Payroll compliance: Compliance with your legal obligations surrounding payroll keeps the IRS and state agencies from levying fines against your business. 

why it makes sense to hire a peo instead of an HR person

When Should a Small Business Delegate or Outsource HR?

You may be wondering: “What size company needs an HR department?” The answer is nuanced: While every company needs experienced HR professionals on their side, not every business needs to have those professionals in-house.

Small businesses can save money and reap the benefits of working with a team of experienced HR pros by outsourcing the functions of HR to a certified professional employer organization or certified PEO for short. 

When working with a PEO, you gain access to dedicated HR personnel who will take the time to get to know your company’s exact needs, goals and employees. You’ll also be able to tap into several advantages typically reserved for larger companies, like great deals on employee benefits and the knowledge of HR pros with decades of industry experience. With a PEO, as you scale your business, your HR department will grow with you. 

Countless businesses struggle with understanding and keeping up with the never-ending compliance, safety, payroll and benefits requirements. As a result, they spend their valuable time trying to build an HR department from scratch.

Delegating HR tasks to a PEO is worth it for many small business owners, but for time and cost-saving reasons, it's especially important for those who want to focus their resources on generating revenue. 

RELATED:Why It Makes Sense to Hire a PEO Instead of an HR Person >> 

Axcet HR Solutions Handles HR for Small Business Owners

Axcet HR Solutions understands the world of HR for small business. Beginning on day one, Axcet will help you identify and tackle a full range of human resources tasks, from recruitment and retention to health and safety management. 

With Axcet HR Solutions, you’ll find that there’s no end to the benefits a growing company can reap by working with a PEO. Wondering if outsourcing human resources is the right call for you? Reach out to our consultants today to learn more

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