October 17, 2019 By SmartBiz Team

Small business owners know that the most important asset to a business is the people who help run it. Human resources management exists to create the best work environment for your employees. It's more than just payroll — it's hiring new employees, training those employees, making sure that your company is being compliant with current laws and regulations, and much more.

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When you're trying to run your business, you may not have time to perform all these functions, or the know-how, or the willingness to spend the cash on hiring your own HR department. HR services for small business can be outsourced to outside parties when you don't need or don't want to pay for a full-time HR manager. Let's look at why outsourcing is such a popular method of handling HR management.

Why Outsource HR?

There are many benefits to outsourcing your HR department. Most importantly, a good HR department or service lets your employees get what they need to be happy and successful while working for your business. These added benefits are icing on the cake:

  • Complexity — The work that goes into HR can sometimes be complex, and outsourcing lets small business owners leave it to the professionals.
  • Cost — If you need HR work done, you have two options: outsource or hire staff for an HR department. Adding an entire department of employees to your small business can be costly. By outsourcing, you can lower that cost.
  • Efficiency — There is a third option: You can do all the HR work yourself or take up your managers' time with it. By outsourcing, you can streamline HR work, freeing up your and your managers' time and boosting your business's efficiency substantially.
  • Training — Finding, hiring, and training good employees can be time-consuming and costly. If you outsource this work, you can take out much of the stress that goes into this process.

What Tasks Can You Outsource?

HR professionals don't just handle payroll and the basics. You can outsource many HR processes to free up your time and energy so you can focus on furthering your business's successes. HR services can:

  • Process payroll.
  • Manage your employees' benefits.
  • Recruit and train employees.
  • Perform background screenings.
  • Offer access to an Employee Assistance Program, including counseling services.
  • Ensure your business is compliant with employment laws and policies.

If you decide that outsourcing your HR management is the best route for you and your business, there are a few options to choose from. Different HR services work in different ways to ensure that you're getting what you need from them. Here are a few of the HR services you'll find in your search:

1. HR Consultants and Consulting Companies

This is the route you should take if your HR needs some tuning up. An HR consultant comes in and works alongside you or your managers to help you develop your HR practices. If you need a little guidance and you want to avoid hiring a full-time HR employee, this is a great option.

There are plenty of ways to hire an HR consultant. You can start by typing in "HR consultants" in your search bar or looking on job board websites like Indeed or Monster. There are quite a few HR consultant groups and companies to choose from, so be sure you do your homework to find one that offers what you need at the best price.

You might also consider hiring a consulting company, especially if you have a specific HR-related project you're trying to develop, such as benefits programs, employee handbooks, and HR training programs. HR consultant companies charge a little more than individual consultants, but generally, you'll only pay them for as long as it takes for them to complete the project you've asked them for.

HR Consulting Costs

Each HR consultant and consultant company has unique rates and prices for certain services. Some charge hourly and some by the task you've hired them to perform. Hourly rates can be anywhere from $50 to $150 per hour or higher for individual consultants and well into the hundreds-per-hour for consulting companies. It's important to know what HR tasks you would like to outsource to your HR consultants and to shop around for the best price for the best work.

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2. PEO

A Professional Employer Organization, or PEO, is a great option popular among very small businesses. If you have 10 or fewer employees, you may want to look further into this option.

A PEO is a company that acts as an HR department for your company. Their benefits are that they take on all the responsibilities that your HR department would. They take care of your payroll, take on many of the liabilities an HR department would take on, and more.

The downside to a PEO is that you're sharing some control of your business with them. Due to PEOs' use of the co-employment model, you'll have to follow their policies and procedures. They become your employer of record. This means your employees are hired through the PEO and they're leased back to you.

PEO Costs

A PEO may charge per employee, and the price varies from company to company. You might see anything from $40 per employee to $900 per employee. They may also charge based on a percentage of your payroll total — around 3% to 8%. As always, shop around to find the best PEO service for your needs. Some PEO services specialize in small businesses and give competitive rates for them.

3. HR Software

If you want to take a more DIY approach to your HR needs, you might consider investing in HR software. You'll still be running your own payroll and such, but the process will be streamlined, and you might get support from the company that runs the software.

You'll still have to collect and input data for your employees, but these programs will track and manage that data once you've done so. If you're already handling your HR tasks, this option is a great way to save you some time and money. There are plenty to choose from, and each has its own offerings.

HR Software Costs

Programs like Paycor and Zoho People give you a chance to save money that you would have otherwise spent on another HR outsourcing option or hiring an HR manager. Online-based software may cost you anywhere from $10 to $100 per month, depending on what you're looking for and which company you choose.

4. HR Service Provider

If you're already using HR software to handle your HR tasks, this option may be the next logical step for you. HR service providers give you specialized guidance that you may need to keep your business compliant. If your business must follow special regulations, certifications, and other industry-specific policies, an HR service provider can help you with them.

HR Service Provider Costs

Oftentimes, you'll find that these HR service providers are add-ons to the HR software you're using. It all depends on which company you go through. Research which HR service providers specialize in your industry or type of business to find the best option for you. They'll generally charge you a monthly rate, plus a flat rate per employee, and these prices have a wide range.

The research and work you put into outsourcing your HR tasks may seem like a lot. But once you've found the solution that works best for your business's type, size, and needs, you'll thank yourself for the time and money you save down the line. Streamline your business and watch it grow.

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