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Outsourcing HR services for your small business: What you need to know


At the end of the day, do you experience hefty payroll problems? Are you losing more employees than ever before? Do you still use spreadsheets to manage things like PTO? Then, it’s probably time to break away from the chaos, outsource your HR administration tasks, and save time and money.

But how do you know if a small business HR outsourcing solution is right for you? Here are a few points to help you find out.

What is HR outsourcing for small business? 

On a basic level, HR outsourcing simply means hiring people outside of your company to perform HR services for your small business. These tasks are typically completed in-house. However, if you dig a little deeper, it’s more like a partnership. That’s because, when you work with another company to help you get your HR functions done, you’ve essentially created a team – where checking HR tasks off your list is the common goal.

And if it’s the right company, you can expect to talk in detail with a dedicated HR specialist to help nail down what’s best for your small business. Get the help you need to:

  • Provide employee access to big-company benefits – When outsourcing, everything from medical health insurance and dental and vision coverage to adoption assistance and training and development resources are in reach.
  • Decrease risks – Sidestep a host of employer-related legal problems and reduce risks when you allow HR professionals to guide you.
  • Get the most out of your talent – Obtain recruiting help to attract employees, and get the performance management support you need going forward to help retain productive talent.

Why do small businesses outsource HR?

Your small business can have big challenges. Benefit from the HR services, support and technology that small business HR outsourcing can provide. You’ll get a plug-and-play HR infrastructure that can allow you to focus less on routine HR administrative tasks and more on key business opportunities.

Which types of functions are outsourced?

As a business leader, smooth payroll processing, consistent HR compliance and happy, healthy employees are just a few of the things that stay top of mind. And while these things are necessary for a business to be successful, they’re not where most people want to spend their time.

Explore the benefits of a complete HR solution

From benefits and payroll to HR compliance, technology and more, one HR solution can deliver:


Background checks, sick leave, employment laws – it’s easy to get overwhelmed with HR-related compliance. And while some things may not seem like a big deal (jury duty requirements, for example), when faced with an HR compliance issue because you’re unfamiliar with the laws in your state, the end result could be stressful and expensive. Outsourcing to an HR partner can help guide you through compliance concerns and help avoid violating someone’s rights.


Build a solid company culture and recruit stellar employees. Before writing a job description or conducting an interview, look at your company culture – especially during this post-pandemic time of change. Outsourcing HR services for your small business and working with an HR partner can help you design an attractive culture for potential new hires. This is crucial to standing out from other companies and attracting ideal talent.


Boost employee productivity, retention and skills with a solid training and development plan. Doing so helps you not only get more from your team but also enables you to move forward faster toward your business goals.

Policy creation

Reduce employer liability from the start when you put proper policies and procedures in place. Outsourcing this task to an HR provider that offers a complete HR solution allows you to manage risk and safeguard your business from liability – all from one seamless HR solution.

Benefits administration

Let your outsourcing partner offer benefits to your employees under plans that they sponsor, while an HR specialist takes care of a multitude of tasks such as FSA, COBRA and retirement administration duties.

Employee retention

Become an employer of choice, increase your value proposition and retain more employees by offering exceptional learning options. For instance, millennials want to continually learn and grow. Organizations that invest in leadership development could potentially have more of a competitive advantage moving forward. Partnering with a third party could help bolster the training and resources side of your business and put you in a better position to keep top talent.


Get the help you need to handle terminations with ease. With small business HR outsourcing, HR professionals are available to guide you through the separation process and even offer a separation release agreement. This can help ensure all documents meet federal and state regulations, and decrease risks to your business—including potential EEO claims.


Take advantage of all-in-one access to HR, payroll and business performance tools. Also, integrate payroll, streamline time and attendance, and decrease the need for tedious manual data entry when you operate across one seamless technology platform.

Why should small businesses consider HR outsourcing solutions?

If you’re looking for a competitive advantage, outsourcing the bulk of your day-to-day duties can help get you there. Best of all, when you work with an HR partner who will listen to you and hear your specific business needs, they’ll then be able to help you work through various HR matters or take them off your plate.

Not sure if outsourcing HR services for small business is right for you? Consider whether the points below apply to you:

  • HR administrative work is consuming too much of your time – Lighten your daily HR administration, and put more focus on HR strategies that will help grow your business.
  • Your employees don’t have a self-service option – Help your team feel empowered to get things done with an easy-to-use self-service platform.
  • Internal HR is becoming too expensive – Keep costs down when you outsource HR tasks to a true HR partner for an affordable cost.
  • Regulations are becoming difficult to keep up with – Quit drowning in the alphabet soup of state and federal laws and regulations, and get the stress off your plate.

What is the cost for outsourced HR and payroll services?

Outsourcing costs can vary from company to company and are based on a variety of factors. For instance, you may initially feel you don’t need to outsource any of your HR, but when an issue arises and you’re contacting an attorney every time you have a question, those fees can really add up later.

First, determine which HR solutions for small business you plan on outsourcing. Are you only concerned about one aspect of administrative work, such as payroll? Or are you looking for a complete HR solution that encompasses multiple services?

In addition, there are two sides of outsourcing: your direct costs (such as offering access to employee benefits, workers’ compensation coverage, etc.) and administrative fees (such as payroll, HR compliance, technology, etc.). Depending on what you decide to outsource and how things are set up, you could pay administrative fees as percentage-based or at a flat rate.

Regardless, outsourcing even a portion of your HR tasks could save you money. Plus, if you decide to take advantage of a full HR solution, you’ll be able to access just what you need in one location – giving you more time to focus on revenue-generating business activities.

Bottom line

Whether it’s time-consuming routine HR tasks, benefits management, compliance worries or more, small businesses face so much day to day. Having a company you can count on to outsource an array of tasks – instead of doing everything internally – could help you reduce your workload and concentrate more on your organization.

In addition to being able to offer employees access to competitive benefits, taking advantage of a complete HR solution enables you to get much-needed payroll assistance and HR guidance, plus access to innovative HR technology and dedicated support. All this and more could potentially work wonders for your business growth.

Learn more about HR solutions for small business by downloading our free e-book: A step-by-step guide to HR outsourcing.