aSmall businesses frequently run on tight margins and try to make ends meet by cutting unnecessary costs. Especially when a company is just starting out, having resources dedicated to HR functions can seem counterproductive.
The truth is that businesses start having HR needs the moment they hire their first employee. As a business grows, those HR needs will require addressing. Many business owners find themselves juggling HR functions with their daily duties, making it difficult to accomplish either task.
If you run a small business and are grappling with the question of how to handle your HR needs, call NetPEO at (678) 376-1212. Our brokers are here to listen to your business needs and help you find an HR outsourcing solution that won’t break your budget.
HR in a Small Business
Many business owners believe they don’t need to be concerned about HR because of the company’s size. However, any business that wishes to maintain its current employees, let alone expand to include new ones, needs to have some focus on completing HR tasks.
No matter your charm, your employees continue to work for you because they receive a paycheck. Being able to process payroll may be simple early on but can become exponentially more complicated as you continue to hire new employees. Managing hours worked, state and federal taxes, and other individualized deductions can add many hours on to the process, particularly as you hire new employees.
Recruitment and Termination
Finding the right employees can be a monumental task. Networking can help but finding someone with the right set of skills can take a large chunk of time. In fact, a study conducted by the Society for Human Resource Management (SHRM) found that it took an average of 42 days to find a replacement employee.
Want to help retain your employees? The same study by SHRM points to a generous benefits package as a key tool to keep employees. This means small businesses choose to offer benefits to their employees, even if they are exempt from the Affordable Care Act requirements. It is, however, an additional monetary and time expenditure to acquire and administer those benefits.
Do your employees know what is expected of them? Setting expectations can be done verbally for some small businesses, but that can become difficult to maintain as the company grows. Drafting policies for employees is a key HR responsibility, as it helps keep your operation running smoothly and can help protect you from legal exposure.
When it comes to handling HR responsibilities, doing things right on the first try is an important part of saving money. Improperly withholding taxes, filing taxes late, and failing to keep a clear line between business and personal expenses can have the IRS at your door. Similarly, unintentional problems with recruitment and termination can have legal ramifications as well.
HR Solutions for Small Businesses
Small businesses have a number of choices when it comes to handling HR responsibilities:
- As the business owner, you could handle HR responsibilities, on top of running the operation
- A dedicated, in-house HR team could be recruited
- Your business could partner with a professional employer organization (PEO)
The first option becomes impractical very quickly as the business takes on new employees. The second option can end up costing you a significant chunk of an already tight budget.
PEOs offer extensive HR outsourcing services at a fraction of the cost of hiring a team of HR professionals to work in-house. With a PEO, you can let trained HR professional manage:
- Legal Compliance
- And more!
Costs of a PEO
The cost of a PEO varies depending on your needs and company size. PEOs structure can structure their fees in a way that best fits your business. Typically, this entails:
- A flat percentage (3%-9%) of monthly payroll
- A flat fee ($900-$1,500) per employee per year
These fees can be substantially less than what you’d pay for a single HR professional to work in your office. It may also be possible to negotiate for a lower fee, particularly if your business has five or fewer employees.
Benefits of a PEO
What makes the choice to partner with a PEO really shine is the benefits you receive. These include:
- More time to focus on your business
- Access to HR experts to assist you with any issues
- Better benefits for your employees
- Improved employee retention
- Faster revenue growth
- Improved business survivability
The last three points come from research by the National Association of Professional Employer Organizations (NAPEO). The research also found that employers saw a decrease in administrative costs per employee of nearly $500 a year.
Finding the Right PEO with NetPEO
If you’d like somebody on your side for your PEO search, turn to the brokers at NetPEO. We work with you to find a PEO that’s right for your small business’s needs. Connect with us via our simple contact form on this site or by calling (678) 376-1212 today!