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Small Business HR

HR isn’t just for giant corporations with whole floors filled with suits. It matters just as much (if not more) when you’re running a small business. Usually, that means you handle everything from hiring and onboarding to payroll, compliance, employee support, and shaping your company culture.

If that list sounds overwhelming, don’t stress. You don’t have to do it like a Fortune 500 company. You just need smart, simple tools that match your size. Read on to learn more.

Small business HR resources

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Frequently asked questions about small business HR

Do small businesses need a dedicated HR department?

Not necessarily. Most small businesses don’t need a full-blown HR department, especially in the early stages. But here’s the catch: HR functions still need to happen. Hiring, onboarding, payroll, compliance, managing leave, keeping the company culture alive—those don’t magically do themselves.

When you’re running or growing a small business, you wear a lot of hats. Maybe you’ve been the recruiter, the payroll manager, the go-to for team conflict, and the one handling benefits, all while juggling client work. Sound familiar? You’re not alone. A 2023 report found that only 33% of businesses with fewer than 50 employees have anyone formally handling HR tasks. That means two-thirds are just winging it.

How do small businesses manage HR without a full team?

It depends on your size, budget, and goals. In many startups and solo founder businesses, the owner or a general manager handles HR tasks. It’s doable, but it can pull focus from growth and client work.

If you have the budget to outsource HR, consultants or professional employer organizations (PEOs) can cover everything from payroll to compliance to hiring. It’ll cost more but saves time and risk.

In most cases, cloud-based HR tools are the saving grace. Small business platforms like Bookipi integrate time tracking, invoicing, and contracts with esignatures in a single app that lives in your back pocket. This option gives you control without needing HR experience.

What are the essential HR functions for small businesses?

The key HR functions for small businesses include:

  • Recruitment and hiring: Finding, screening, and onboarding new employees.
  • Training and development: Helping employees grow their skills and knowledge.
  • Performance management: Setting expectations and providing feedback.
  • Compensation and benefits: Managing pay, bonuses, and benefits like health insurance and retirement plans.
  • Employee relations and culture: Building a positive workplace atmosphere.
  • Employment law and compliance: Ensuring adherence to labor laws and regulations.
  • Administration: Handling paperwork, documentation, and record-keeping

How do you set up HR for a small business?

Start with the core HR processes. Your first HR systems need to take care of the stuff that keeps your team running and protected:

  • Employee onboarding: Create a checklist that covers documents, equipment, introductions, and systems access. Keep it repeatable.
  • Payroll setup: Use compatible tools to automate employee payments and stay tax-compliant without the stress. For Australian businesses, Payroller is a user-friendly and affordable option for small businesses.
  • Contracts and policies: Draft a simple employment contract template and essential policies like time off, harassment, or remote work.
  • Record-keeping: Use cloud storage to keep employee files safe and organized. Think digital, not paper binders.

Next, set up a basic compliance checklist. A few boxes you’ll need to tick are worker classification, wage and hour laws, and workplace notices and handbooks. Amazing HR isn’t about paperwork, but make sure your staff has opportunities to give you feedback to continue improving the process.

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